US labour market adds 175,000 jobs in May - but is still short of hoped-for levels

The unemployment rate rsoe from 7.5 to 7.6 per cent

The US labour market showed signs of improvement over May, with a new report today showing that the world's largest economy added a better than forecast 175,000 jobs over the month.

The unemployment rate, meanwhile, ticked up from 7.5 to 7.6 per cent, with the rise coming as more people returned to the labour market to look for jobs, a positive sign that underscores the recovery story.

The data, which was released in a monthly report from the US Labour Department, suggests that, if the trends persist, policymakers who steer the policies of the Federal Reserve might begin to roll back some of the central bank's stimulus measures by the end of the year. Currently, the Fed is buying $85bn in mortgage- and government-bonds every month to support demand, while at the same time keeping interest rates at record lows. While the latter is likely to remain unchanged, recent indications from the Fed chairman Ben Bernanke and from the minutes of the Fed's monthly policy meeting have pointed to the possibility of some kind of reduction in the bond buying programme as the economy improves.

The latest figures, thought positive, still fall short of the run rate of 200,000 jobs per month that many economists have said is needed before the stimulus measures are rolled back.