Thursday, July 2, 2009
U.S. Employers cut a larger-than-expected 467,000 jobs in June, driving the unemployment rate up to a 26-year high of 9.5 percent, suggesting that the economy's road to recovery will be bumpy. A separate report showed that new jobless claims dropped to 614,000 last week, while continuing claims fell unexpectedly.
The Labor Department's monthly employment report showed that even as the recession flashes signs of easing, companies likely will want to keep a lid on costs and be wary of hiring until they feel certain the economy is on a solid ground.
June's payroll reductions were deeper than the 363,000 that economists expected.
However, the rise in the unemployment rate from 9.4 percent in May wasn't as sharp as the expected 9.6 percent. Still, many economists predict the jobless rate will hit 10 percent this year, and keep rising into next year, before falling back.
All told, 14.7 million people were unemployed in June.
If laid-off workers who have given up looking for new jobs or have settled for part-time work are included, the unemployment rate would have been 16.5 percent in June, the highest on records dating to 1994.
Since the recession began in December 2007, the economy has lost a net total of 6.5 million jobs.
As the downturn bites into sales and profits, companies have turned to layoffs and other cost-cutting measures to survive. Those include holding down workers' hours and freezing or cutting pay.
The average work week in June fell to 33 hours, the lowest on records dating to 1964.
Layoffs in May turned out to smaller, 322,000, versus the 345,000 first reported. But job cuts in April were a big deeper — 519,000 versus 504,000, according to government data.
Even with higher pace of job cuts in June, the report indicates that the worst of the layoffs have passed. The deepest job cuts of the recession came in January, when 741,000 jobs vanished, the most in any month since 1949.
Still, job losses last month were widespread.
Professional and business services slashed 118,000 jobs, more than double the 48,000 cut in May. Manufacturers cut 136,000, down from 156,000. Construction companies got rid of 79,000 jobs, up from 48,000 the previous month. Retailers eliminated 21,000, up from 17,600. Financial activities cut 27,000, following 30,000 in May. The government cut 52,000 jobs, up from 10,000 the previous month. Leisure and hospitality cut 18,000 jobs, erasing a gain of the same size in May.
One of the few industries adding jobs: education and health services.
New Unemployment Claims Drop
The Labor Department said Thursday that initial jobless benefit claims fell by 16,000 to a seasonally adjusted 614,000, nearly matching analysts' estimates in a survey by Thomson Reuters.
The total jobless benefit rolls fell for the second time in three weeks. The number of continuing claims is down 53,000 to 6.7 million, defying analysts' expectations of a small rise.