Jobless Rate Highest in 4 YearsBy Reuters - | Posted 2008-08-01 Print
The U.S. unemployment rate hit its highest level in four years during July as employers cut non-farm jobs for a seventh straight month, though less severely than predicted, a Labor Department report.
WASHINGTON (Reuters) - The U.S. unemployment rate hit its highest level in four years during July as employers cut non-farm jobs for a seventh straight month, though less severely than predicted, a Labor Department report on Friday showed.
The jobless rate climbed to 5.7 percent from 5.5 percent in June as 51,000 jobs were eliminated in July, bringing losses for the year to 463,000. Analysts polled by Reuters had expected 75,000 jobs would be cut last month but had forecast the unemployment rate would rise only to 5.6 percent.
The department trimmed its estimates for job losses in each of May and June. It said 47,000 jobs were cut in May instead of 62,000 and 51,000 in June rather than 62,000 -- a total of 26,000 fewer jobs lost in the two months than previously thought.
U.S. equity index futures and the dollar rose after the closely watched employment data was issued, while U.S. Treasuries turned negative. Fed fund futures trimmed gains and now see a 30 percent chance of September rate hike, up from 26 percent before the jobs report was issued.
Brian Gendreau, an investment strategist with ING Investment Management Americas in New York, described the monthly job losses as "painful" and consistent with a weak economy.
"We are clearly in a growth recession and my fear is that we are in a mild, but longer recession than the one we experienced in 2001-2002," Gendreau said.
The unexpectedly steep climb in the unemployment rate underlines how a continuing deterioration in the housing markets continues to chill economic growth. The last time the jobless rate was higher was in March 2004 when it hit 5.8 percent.
While July's job loss was not as bad as feared, it did not change the picture of an economy that is basically treading water, analysts said.
"Overall the report looks to be broadly consistent with other data that show the economy quite soft, basically stalled, not growing very much, but not contracting very much either," said David Resler, chief economist for Nomura Securities International in New York.
Department officials said there were large rises in the jobless rate for 16-to-24-year-olds. In addition, the average workweek slipped to 33.6 hours, the lowest since November 2004, from 33.7 hours in June.
Job losses in July were widespread. The only major sectors showing any gains were government, hospitality, and education and health services. Construction industries shed another 22,000 employees and factories cut 35,000 jobs.
(Reporting by Glenn Somerville, editing by Neil Stempleman)
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