The U.S. unemployment rate reached a 26-year high in May at 9.4 percent, but economists were encouraged by a slowing pace of job losses.

“Things are still getting worse, but the pace of decline has slowed down,” David Wyss, chief economist at Standard & Poor’s, told the New York Times after the U.S. Department of Labor released its employment report. “Overall, it’s not quite as dire as it looked in the first quarter.”

The Labor Department said 345,000 workers lost their jobs last month, marking the second consecutive month that the pace of unemployment has slowed and the lowest number of job losses since September.

However, the economy is expected to shed high numbers of jobs through the rest of year.

If laid-off workers who are no longer looking for a job or have accepted part-time work were added to the jobless figures, the May unemployment rate would be 16.4 percent, the Labor Department said.

The manufacturing sector lost 156,000 jobs last month; job losses moderated in construction and service industries. Health care added 24,000 jobs.

The April unemployment rate was 8.9 percent.