US Jobless Rate Stays At 6.3 Percent; 217,000 Jobs Added

WASHINGTON (Reuters) - U.S. employers maintained a solid pace of hiring in May, returning employment to its pre-recession level and offering confirmation the economy has snapped back from a winter slump.

Nonfarm payrolls increased 217,000 last month, the Labor Department said on Friday. Data for March and April was revised to show 6,000 fewer jobs created than previously reported.

Economists polled by Reuters had expected employment to increase 218,000 last month.

Despite decelerating from April's outsized 282,000 gain, when hiring was still bouncing back from a winter lull, May marked a fourth straight month with job gains above 200,000 and an important milestone in the economy's recovery.

It finally recouped the 8.7 million jobs lost during the recession. Employment has risen by 8.8 million since hitting a trough in February 2010.

Average hourly earnings, which are being closely watched for signs of how fast labor market slack is easing, rose five cents last month.

The pace of hiring adds to data ranging from automobile sales to services and factory sector activity that have suggested growth this quarter will top a 3 percent annual pace.

The economy contracted at a 1.0 percent rate in the first quarter, dragged down by unusually harsh winter weather and a slow pace of inventory building by businesses.

The unemployment rate held steady at a 5-1/2 year low of 6.3 percent even as some Americans who had given up the search for work resumed the hunt. That was because there was an increase in household employment.

Economists expect more previously discouraged workers to re-enter the labor force over the course of the year. While that would be a sign of confidence in the labor market, it could slow the decline in the jobless rate.

The return of discouraged job seekers would be welcomed by the Federal Reserve, which has cited low labor force participation as one of the reasons for maintaining an extraordinarily easy monetary policy.

The labor force increased by 192,000 people in May after declining sharply the prior month. That left the labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job unchanged at 62.8 percent.

May employment gains were broad-based. Manufacturing employment increased by 10,000, expanding for the 10th straight month. Further increases are expected as auto sales outpace inventories.

Construction payrolls rose by 6,000. It was the fifth consecutive month of gains, but the pace is slowing.

There were sturdy job gains in leisure and hospitality, and professional and businesses services, as well as healthcare. Government payrolls increased 1,000, the fourth straight month of gains. Retail employment also rose last month.

The length of the workweek held steady at 34.5 hours.