Gloomy: Federal Reserve Board Chairman Ben Bernanke

The U.S. unemployment rate jumped to 5.5 per cent in May - the biggest monthly rise since 1986.

The latest snapshot of business conditions showed a deeply troubled economy, with dwindling job opportunities in a time of continuing hardship in the housing, credit and financial sectors.

"It was ugly," said Richard Yamarone, economist at Argus Research.

With employers worried about a sharp slowdown and their own prospects, they clamped down on hiring in May, according to the Labor Department.

The unemployment rate soared from 5 per cent in April, surprising economists who were forecasting a tick-up to 5.1 per cent.

The job losses in both March and April turned out to be larger than the government previously reported. Employers now have cut payrolls for five straight months.

The rate is relatively moderate by historical standards. Most jobs were lost in manufacturing, construction, retailing and professional and businesses services.

Those losses swamped gains elsewhere, including in the education and health fields, government, leisure and hospitality.

A trio of crises - housing, credit and financial - have rocked the economy. That's caused economic growth to slow to a crawl as businesses and consumers have tightened their belts. Spiraling energy costs are another negative force.

The country's economic problems are a top concern for voters. "For the average American there is not debate that the eocnomy is in a recession," said Mark Zandi, chief economist at Moody's Economy.com.

"That's because their net worth is lower, their purchasing power is lower and it is tough to find a job. If you lose a job, it is tough to get back in," he added.

So far this year, the government said, job losses have totaled 324,000.

With food and energy prices marching upward, paychecks aren't stretching as far.

Although tax rebates helped to energize shoppers and give major retailers better sales in May, analysts still believe that anxious consumers will be keeping a close watch on their purchases and their budgets in the months ahead. A weakening job market could make people feel less inclined to spend.

Worried about inflation, Federal Reserve Chairman Ben Bernanke has signaled that the central bank's rate-cutting campaign, which commenced last September to help bolster the economy, is probably over for now.

Fed officials and the Bush administration are hoping that the Fed's powerful doses of rate reductions and the government's $80 billion stimulus package will pull the economy out of its deep funk in the second half of this year.

Even if that happens, the unemployment rate is expected to climb to 6 per cent or higher early next year.