U.S. added 175,000 jobs in May, showing stable but slow recovery The major U.S. stock indexes rose about 1 percent during morning trading and in the early afternoon, making up market losses after a volatile week of mixed data. The government's jobs report served as a ballast for an economy buffeted by fiscal head winds at home and weak markets overseas. "The reaction in the markets will be a huge sigh of relief, given how the expectations had been beaten down," said Richard Moody, chief economist at Regions Financial Corp. The bulk of the job gains in May were in the service industry, which added 57,000 jobs last month. Still, roughly half of those were temporary positions, suggesting that businesses remain uncertain of demand. Missing from the picture were production jobs in industries such as construction and manufacturing. The rebound in the housing market had spurred a turnaround in the building industry over the past several months, but the sector added only 7,000 jobs last month. Meanwhile, manufacturing shed 8,000 workers, though the auto industry continued to add jobs. A new survey from the National Association of Manufacturers, an industry group, found that members were planning to increase hiring only by an average of 0.6 percent over the next year. About 16 percent of those surveyed said they were likely to reduce their staff. "There continues to be this skittishness to hire, not just in the current numbers, but moving forward, there really isn't a huge surge coming, either," said Chad Moutray, the group's chief economist. Though the pace of the recovery has been steady, economists have criticized Washington as standing in the way of more rapid gains. They estimate that the combination of tax increases and government spending cuts - also known as the fiscal drag - are holding back growth by at least one percentage point. Many anticipate the country's economic output to grow more slowly during the second quarter as a result. In addition, some economists have raised concerns about the types of jobs being created. Sectors such as retail, restaurants and bars have been adding plenty of jobs, but those positions tend to pay low wages. Friday's report showed workers" average hourly earnings rose only a penny in May to $23.89. For the entire year, wages have risen 2 percent. "It is critical that we remain focused on pursuing policies to speed job creation and expand the middle class," said Alan Krueger, head of President Obama's Council of Economic Advisers. Friday's job report also has implications for the Federal Reserve's $85-billion-a-month stimulus effort. The Fed has tied the program to substantial improvement in the labor market, but officials have been vague about what would trigger a pullback. Analysts predicted that the pace of hiring in May was not yet robust enough to convince the Fed that the economy could stand on its own. "Today's report is perhaps the perfect number for nervous investors," said James Marple, senior economist at TD Bank. It is strong enough to point to continued economic recovery, but not so strong as to bring forward expectations of Fed tapering.