Dire new unemployment data and a rise in the jobless rate dented Barack Obama's reelection hopes Friday and boosted his foe Mitt Romney who brands the president a failure who cannot create jobs.

Labor Department figures bolstered fears of an economic slowdown -- only 69,000 jobs were added in May and the unemployment rate rose to 8.2 percent, numbers that detonated in the middle of a cliffhanger US election race.

"It is now clear to everyone that President Obama's policies have failed to achieve their goals and that the Obama economy is crushing America's middle class," Republican White House candidate Romney said.

"The President's re-election slogan may be 'forward,' but it seems like we've been moving backward. We can do so much better in America. That's why I'm running for president."

Obama, however, hit back in a combative speech, warning that Congress should immediately pass his job creating plans, for tax breaks for small businesses, for more teachers and police officers and to put veterans to work.

"The economy is growing again, but it is not growing as fast as we want it to," said Obama, in Golden Valley, Minnesota.

"We've had a crisis in Europe's economy that is having an impact worldwide and it's starting to cast a shadow on our own as well.

"So we've got a lot of work to do before we get to where we need to be."

Alan Krueger, chairman of Obama's Council of Economic Advisers, echoed the same concerns and urged no change in course.

"It is critical that we continue the president's economic policies that are helping us dig our way out of the deep hole that was caused by the severe recession," Krueger said.

But the jobs data will dismay Obama's campaign team which is locked in a tight race with Romney ahead of the November 6 election, in which the sputtering economic recovery is seen as the Republican's best hope of victory.

Recent polling shows that while Obama enjoys advantages on foreign policy and in his ties to the middle class, Romney is as, or more, trusted for his capacity to improve the US economy -- the top election issue.

What may be most damaging is that the data do not appear to represent a one off downward blip in the unemployment and economic situation, as fears mount that overseas crises, including in Europe, could spread to the United States.

The Labor Department's figures were well below expectations of an increase of 150,000 jobs.

They represented the smallest increase in new jobs since May 2011 and marked the first increase in the unemployment rate since last June.

The Labor Department also slashed its estimate of April job gains by 33 percent, to 77,000, and lowered its March estimate to 143,000.

There was further bad news as the Institute for Supply Management's index fell to 53.5 from 54.8 in April, showing the manufacturing sector was still growing but closer to the slower pace of the first quarter of the year.

The Commerce Department meanwhile reported Thursday that growth in gross domestic product, was at 1.9 percent in the January-March period, down from an estimated 2.2 percent pace.

The jobs data come at a time when Obama is seeking to negatively define Romney for voters, arguing that the Republican's instincts as a millionaire venture capitalist would harm the middle class and only benefit big business.

Obama's searing attacks on Romney's past, as head of Bain Capital, an asset management fund he founded, however keep being undermined by Democrats who are ostensibly supporting him.

On Thursday former president Bill Clinton, the most high-profile Democrat in America other than Obama, said on CNN that Romney's business career and time as Massachusetts governor qualified him to be president.

However, Clinton said Obama was a better bet for America, and predicted that the president would win by five or six points in November and that his policies would be better than Romney's for the economy.