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WASHINGTON: The world’s biggest economy lost jobs for a sixth
straight month in June as US employers shed 62,000 non-farm jobs
amid a lingering slowdown, a Labor department report showed
Thursday.
The unemployment rate held steady last month at
5.5 percent.
The volume of job losses was slightly worse than
the markets had expected, as most economists had predicted that
60,000 posts were cut in June.
“Unemployment is still on a rising trend,
payrolls are falling, and there’s no light at the end of the
tunnel here, so the tax rebates may have pushed up consumer
spending, but it doesn’t seem to have improved the labor market
yet,” said Ian Morris, chief US economist at Hong Kong and
Shanghai Banking Corporation (HSBC) North America.
Employers started laying off substantial numbers
of workers in January following several years of solid employment
gains that were boosted by a booming housing market and confident
consumers.
But the job picture has changed dramatically
this year amid a housing market slump, a credit squeeze, a sharp
downturn on Wall Street and rocketing oil prices which broke above a
record $146 a barrel Thursday.
The US economy has shed jobs every month of this
year so far, and June’s job cuts followed a loss of a revised
62,000 positions in May. The government had originally said that
49,000 jobs were cut in May.
HSBC’s Morris said the “continued rate of
deterioration” in the job market could see the unemployment rate
peak above six percent in coming months.
Economists say America’s giant economy needs
to create about 100,000 jobs every month to absorb new labor market
entrants.
Analysts said the weak job reading is likely to
pressure the Federal Reserve to keep interest rates on hold at 2
percent despite mounting inflation concerns.
“We expect the Federal Reserve to remain on
hold on the basis of weak employment among other factors. Markets
are pricing in hikes after this summer,” said Stephen Gallagher,
an economist at Societe Generale.
The central bank had slashed its key base rate
aggressively since September in a bid to fire up economic growth,
but it put its rate-cutting campaign on hold last month in the face
of inflation fears tied to surging oil prices.
US Treasury Secretary Henry Paulson underlined
such concerns Wednesday, saying: “High oil prices will in all
likelihood prolong our economic slowdown.”
Some analysts say the economy is on the brink of
a recession.
Economic growth improved to 1 percent during the
first quarter compared with 0.6 percent in the fourth quarter of
2007, but momentum has slowed significantly from the blistering
4.9-percent clip during the third quarter of last year.
Job losses were particularly heavy in the
goods-producing, construction, manufacturing and service sectors
last month.
A total of 43,000 positions were lost in the
construction industry, which has been hit hard by the housing
downturn.
The manufacturing sector suffered a loss of
33,000 positions while professional and business services firms
trimmed their payrolls by 51,000 positions.
The administration of US President George W.
Bush approved a 168-billion-dollar economic stimulus, stuffed with
tax rebates, to bolster the economy, but it has shown scant signs of
helping the labor market yet.
“Monthly job losses in the 75,000 range, which
we have averaged this year, don’t point to an economy that is
crashing and burning. But it does indicate that conditions are
slowly but steadily deteriorating,” said Joel Naroff of Naroff
Economic Advisors.
Retailers shed 8,000 jobs while the education
and health care sectors added 29,000 new jobs during June, the
report showed.
A gain of 24,000 posts in the leisure and
hospitality sectors also helped offset some of last month’s job
losses.
Average hourly wages rose 0.3 percent in June,
or six cents, to 18.01 dollars while the average length of a
workweek remained unchanged at 33.7 hours.
-- AFP
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