June 7 (Bloomberg) -- American teenagers looking for summer jobs are facing the worst prospects in five years as retailers and restaurants trim payrolls in response to a slowing economy.

The teenage jobless rate soared to 18.7 percent in May, the highest since June 2003, from 15.4 percent the month before, the Labor Department said yesterday. The increase was the biggest since the department began keeping the statistics in 1948. Overall, the unemployment rate rose half a point to 5.5 percent.

Bookseller Borders Group Inc., clothing store Talbots Inc. and movie-rental chain Blockbuster Inc. are among the companies trimming payrolls as consumers rein in spending. The tough job market for teens is another sign of the widening effects of the economic downturn that began with a slump in housing and spread to the financial industry.

``I said I'd be part-time or full-time, whatever they needed,'' said Jackie Brooks, a 19-year-old university student in Mishawaka, Indiana. ``Looking back, I never really had an issue finding a job for the summer. It's just a new thing.''

Total U.S. payrolls have declined for five straight months as economic growth weakened. Consumer spending growth is slowing after a slide in home values, record energy costs and the credit crisis hit household budgets. The unemployment rate for teenagers has climbed from 12.8 percent in May 2000.

Scouring Malls

``I've put in a lot of applications -- no calls yet,'' Kip Nichols, 17, of Dallas, said in a telephone interview. He said he's applied for six openings, most of them full-time retail positions at book or clothing stores in local malls, and hopes to continue working part-time when he goes back to school in the fall.

Teens are among the first to feel the effects of a slowing employment market, said Joseph McLaughlin, a research associate at Northeastern University's Center for Labor Market Studies in Boston.

``That's what's going to hurt them this summer,'' McLaughlin said in a Bloomberg Television interview. ``They're kind of lowest in the hiring queue, so we need strong job growth so employers have to dig down and hire those 16- and 17-year- olds who have limited job experience.''

Some economists say the labor force cannot accommodate the summer influx of teenage job-seekers. ``There are simply just not enough jobs available to satisfy the flood of students that are in need of summer income,'' David Rosenberg, chief North American economist at Merrill Lynch & Co. in New York, wrote in a note to clients.

Strained Budget

The increase in teenagers looking for work is ``understandable considering the strains on the household budget,'' he wrote. ``Students are required to earn their own money for next fall.''

Some say the jobs are there for savvy teens. In a phone interview from Huntington Beach, California, Renee Ward, founder and director of Teens4Hire.org, an online career and recruitment site, said, ``There are fewer jobs, and it's very competitive, but teens who're doing the right things necessary to get a job can still find one.''

Foreign students may be having a particularly hard time finding work in the U.S. this year.

``People don't want to hire us,'' said Sarah Kelly, 22, referring to her job hunt with fellow Irish student Le Nadiene Donnolly, 21. Kelly said the two, who attend the Galway-Mayo Institute of Technology in Galway, Ireland, have applied for every job they could find and have been turned down each time. She said in an interview in Boston that a lot of employers don't want to hire foreign students this summer.

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

Last Updated: June 7, 2008 09:21 EDT