US unemployment increases to 6.1%

The US unemployment rate rose in May to its highest level in nearly nine years.

But an unexpectedly mild jobs drop and an overhaul of earlier figures fuelled hopes the soft economy may be set for a pickup.

The unemployment rate inched up to 6.1 per cent, the highest level since July 1994, from 6 per cent in April.

Employers cut 17,000 workers from their payrolls in May - a smaller decline than the 39,000 drop projected by US economists.

Before the jobs report came out, some investors were betting the Federal Reserve might cut interest rates by as much as an aggressive half-point at its upcoming meeting on June 24-25th.

But the data persuaded some analysts that the cut might be a smaller quarter-point.