As another summertime swoon looms, the Bureau of Labor Statistics reported that job creation missed economist estimates for 158,000 new positions and the jobless rate rose for the first time in nearly a year.

Labor force participation remains near 30-year lows though incrementally better than last month, rising to 63.8 percent.

The unemployment rate that counts discouraged workers rose as well, swelling to 14.8 percent form 14.5 percent in April.

Long-term unemployment also took a sharp upturn, with the number of those out of work for 27 weeks or more jumping from 5.1 million to 5.4 million. The average duration of unemployment moved from 39.1 weeks to 39.7 weeks.

"It's painfully obvious the economic recovery in the U.S. isn't just slowing down, it's pulling up the emergency brake. And, lack of job creation isn't the only critical concern. Wages/Income is sharply lower," said Todd Schoenberger, managing principal The BlackBay Group in New York.

"For those lucky enough to have a job, their spending power is sliding when accounting for inflation. The markets will respond negatively to this report," he added.

Markets reacted immediately to the numbers.

In May, stocks suffered through their worst month in two years, and the job-creation figures only added to the gloom.

Stock were sharply lower open for Wall Street, while investors continued to pour into bonds, sending the 10-year Treasury note yield tumbling to near 1.47 percent. Crude oil fell more than 4 percent, below $83 a barrel, while gold and other metals jumped.

The bulk of the employment gains came from the service sector, which added 84,000 jobs, while manufacturing grew 12,000. Government shaved 13,000 jobs, including 5,000 at the federal level. Private payrolls rose 82,000.

"Government is the lender and spender of last resort in this economy," said Doug Roberts, managing principal for Channel Capital Research. "There is no priming the pump, and as government stimulus wears off the economy starts to slow down again."

Construction took the biggest hit, dropping by 28,000 for the month.

Most economists attributed the reversal in fortune to a historically mild winter that saw job creation at a clip of 250,000 per month. In addition to the loss of construction jobs, the hospitality industry, which had been at the forefront of economic growth, lost 9,000 positions and temp hiring gained only 9,000.

"There was clear evidence of a weather payback," said Michelle Meyer, economist at Bank of America Merrill Lynch. "All three of these sectors had seen solid job growth during the winter."

The weak showing immediately sparked market discussion about whether the Federal Reserve will step in with another round of quantitative easing after its Operation Twist program concludes at the end of June.

"With markets in a highly volatile state of mind a weak May employment report was the best possible outcome because it would offer investors some assurance that the Fed will likely move to boost the US economy with a further round of quantitative easing in some form or another," said Andrew Wilkinson, chief economic strategist at Miller Tabak.