US: 467K jobs cut in June; jobless rate at 9.5 pc



Thu-Jul 02, 2009

Washington / Associated PressEmployers 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.

The Labor Department report,
released on Thursday, 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 solid ground.

June's
payroll reductions were deeper than the 363,000 that economists
expected and average weekly earnings dropped to the lowest level in
nearly a year.

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.

"We
were on the road of things getting less bad in the jobs market, and
that has been temporarily waylaid," said economist Ken Mayland,
president of ClearView Economics. "But this doesn't change my view that
the recession will end later this year. We're probably two months away."

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.

And there was some other encouraging job news Thursday.

In
a separate report, the department said the number of newly laid-off
workers filing applications for unemployment benefits fell last week to
614,000, in line with economists' predictions. The number of people
continuing to draw benefits unexpectedly dropped to 6.7 million.

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, which added 34,000 positions last month and 47,000 in May.

Mayland
and other economists said a good chunk of June's job losses likely were
affected by shutdowns at General Motors Corp. and fallout from the
troubled auto industry, which should let up later this summer. The
government said employment at factories making autos and parts fell by
27,000 last month.

Payroll losses and the unemployment rate
are derived from two separate statistical surveys. The jobless rate
probably would have moved higher if not for people dropping out of the
labor force.

Wage gains

With the weakness in the job market, workers didn't see any wage gains in June. Average hourly earnings were flat at $18.53.

Average
weekly earnings fell from $613.34 in May, to $611.49 in June, the
lowest level in nearly a year and the first drop since March. That
raises fresh questions about consumers' willingness to spend in the
months ahead.

The worst crises in the housing, credit and
financial markets since the 1930s have plunged the country into the
longest recession since World War II.

Many think the jobless
rate could rise as high as 10.7 percent by the second quarter of next
year before it starts to make a slow descent. Some think the rate will
top out at 11 percent. The post-World War II high was 10.8 percent at
the end of 1982, when the country had suffered through a severe
recession.

Federal Reserve Chairman Ben Bernanke predicts the
recession will end this year, with many economists forecasting that the
economy will start to grow again as soon as the current July-September
quarter.

But recoveries after financial crises tend to be
slow, which is why economists predict it will take years for the job
market to return to normal. Some predict the nation's unemployment rate
won't drop to 5 percent until 2013.

An elevated unemployment
rate could become a political liability for President Barack Obama when
congressional elections are held next year. The last time the
unemployment rate topped 10 percent, the party of the president — then
Ronald Reagan's GOP — lost 26 House seats in midterm elections in 1982.


So far, many people are saving — rather than spending — the
extra money in their paychecks from Obama's tax cut, blunting its help
in bracing the economy. Much of the economic benefit of Obama's
increased government spending on big public works projects won't kick
in until 2010, analysts say.

The White House last week said
federal money was being shoveled out of Washington quickly, but states
aren't steering the cash to counties that need jobs the most.

Large
job cuts have continued this week. Newspaper publisher Gannett Co. said
it plans to cut 1,400 jobs in the next few weeks, about 3 percent of
the work force, as it faces a prolonged slump in advertising revenue.
Farm machinery company Deere & Co. said 800 salaried employees, or
3 percent of its salaried work force, took a voluntary buyout offer.


lnk:-http://newsx.com/story/56727