WASHINGTON (Reuters) - Hiring by U.S. private employers slowed sharply in May, a setback for the economy's recovery, even as temporary census hiring pushed overall payrolls growth to its fastest pace in 10 years.
Nonfarm payrolls rose by 431,000 jobs on the surge in government hiring but private employment, a barometer of underlying labor market strength, climbed just 41,000, the Labor Department said on Friday.
Analysts said the data was disappointing but it was unlikely the economy would slip back into recession. Companies are already spread too thin on labor and cannot increase working hours indefinitely to maintain output, they said.
"We do not yet have the makings of a double-dip, and we still believe that private sector job creation will gradually improve over the rest of the year," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.
Financial markets expected private employment to rise 190,000 after increasing 218,000 in April.