U.S. employment rose far less than expected in May to record its weakest reading since September, while the jobless rate rose to 9.1 percent as high energy prices and the effects of Japan's earthquake bogged down the economy.

COMMENTS:

SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK:

This definitely reinforces those indications that we had of a slowdown in employment. It is likely that this will be a soft patch in the coming months but overall it will probably be a soft patch rather than a double-dip recession or something worse.

I don't think QE3 is on the horizon any time soon, although obviously it is not impossible.

PARESH UPADHYAYA, SENIOR STRATEGIST, BANK OF AMERICA-MERRILL LYNCH, NEW YORK:

It was a very disappointing number. It seems to be in line with the overall deterioration in the U.S. macro fundamentals. Therefore, it should be negative for the equity market. This is the kind of number that could have us test key levels near 1,300, and it has the potential to turn into a broader bout of risk aversion that could actually make the dollar stronger. I still think the hurdle to get to QE3 is very large, but this will at least raise speculation that QE3 is not entirely off the table.

TODD SCHOENBERGER, MANAGING DIRECTOR, LANDCOLT TRADING, LEWES, DELAWARE:

Arguing about the merits of whether QE3 would be a good idea, is irresponsible right now. It would be proactive for the FOMC to discuss, and develop a strategy for implementing QE3, because it's painfully clear the United States is headed for a very messy second half of 2011. We have to keep in mind, Washington/Central Bank tends to be reactive, so look for the volcano to erupt before those in charge on Constitution Avenue begin to move forward with more accommodation. Hesitation, sadly, will improve the prospects for a double-dip in 2012.

DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:

While elsewhere the May details were mixed the conclusion must be that the labor market recovery has lost momentum. Given that Q1 GDP fell short of 2.0% and that Q2 so far does not look set to be much better GDP growth is at levels which do not require much addition to employment. This latest report confirms that the recovery still has only modest momentum.

A more genuine upside surprise was in the workweek, at 34.4 hours unchanged though April was revised up from 34.3, the level seen in March. April's workweek breakdown shows encouraging improvement in manufacturing and construction and stability in private sector services. The upside surprise in the workweek does offset the employment disappointment somewhat. Aggregate hours worked, with a 0.1% May gain after a 0.5% rise in April are showing improvement in Q2.

The May payroll is a disappointment which emphasizes the recovery is modest, but is not weak enough to suggest growth is stalling. It does not appear weak enough to get the Fed debating QE3.

MARKET REACTION: STOCKS: U.S. stock index futures dropped BONDS: U.S. bond prices added to gains FOREX: The dollar fell against the yen and Swiss franc

Japan