The dollar extended its decline against the yen after a report showed U.S. employers in May added the fewest number of workers in eight months and unemployment unexpectedly rose to 9.1 percent, increasing concern the U.S. economic recovery is slowing. Payrolls expanded by 54,000 last month, after a revised 232,000 increase in April, the Labor Department said today in Washington. The jobless rate rose to 9.1 percent. Employment was forecast to grow by 165,000 last month, according to the median estimate of economists surveyed by Bloomberg News. “Given the very, very weak labor market, the shorts are going to want to test the 80 level in dollar-yen to the downside,” said Boris Schlossberg, director of research at online currency trader GFT Forex in New York. “It’s an ugly, ugly number all around. The news had no silver lining to it whatsoever. It shows a considerable slowdown in economic activity.” A short position is a bet an asset will decline in value. The dollar fell 0.8 percent to 80.23 per yen at 8:43 a.m. in New York, from 80.90 yesterday. It fell 0.1 percent to $1.4508 per euro from $1.4491. IntercontinentalExchange Inc.’s Dollar Index, which measures the greenback against the currencies of six trading partners, fell 0.1 percent to 74.228 from 74.333. Yen Strength The yen rose earlier against all 16 of its most-traded peers as Asian stocks declined after a measure of Chinese corporate activity fell in May. The euro is headed for its longest stretch of weekly gains versus the dollar since March as international officials prepare a second bailout for Greece. U.S. payrolls increased by a less-than-projected 54,000 last month, after a revised 232,000 gain in April that was smaller than initially estimated, Labor Department figures showed today in Washington. The median forecast in a Bloomberg News survey called for payrolls to rise 165,000. The jobless rate climbed to the highest level this year from 9 percent a month earlier. “The stage has been mostly set for a fairly week number,” said Joe Manimbo, a market analyst in Washington at Travelex Global Business Payments, a currency-exchange network, before the report. “That would tend to put some pressure on the dollar.” Fed Stance Weaker-than-expected economic data and low interest rates have damped the appeal of U.S. assets as the Federal Reserve lags behind central banks from the euro zone to Australia. A report earlier this week showed manufacturing in the U.S. last month expanded at the slowest pace since September. Home prices in 20 U.S. cities dropped to the lowest level since 2003 in March, another report showed. The Fed has kept its benchmark interest rate at a record low of zero to 0.25 percent since December 2008. The European Central Bank raised its rate by 25 basis points in April and the Reserve Bank of Australia has raised its benchmark rate seven times since the financial crisis. The dollar rose 0.9 percent May 6, when the Labor Department reported employers added more jobs than forecast. To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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