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Companies still cutting despite wide consensus economy will improve
By Jeannine Aversa
Associated Press
Published on Friday, Jul 03, 2009
WASHINGTON: Employers cut a larger-than-expected 467,000 jobs in June and the unemployment rate climbed to a 26-year high of 9.5 percent.
The Labor Department report, released Thursday, showed that even as the recession flashes signs of easing, companies probably will watch expenses and be wary of hiring.
President Barack Obama, in an interview with the Associated Press, said he is ''deeply concerned'' about unemployment and conceded that too many families are worried about ''whether they will be next'' to suffer an economic blow. He also expressed disappointment over the weak employment figures, acknowledging that ''what we are still seeing is too many jobs lost.''
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.
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.
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
record dating back 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 in Pepper Pike. ''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 6.5 million jobs.
Cutting to survive
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.
''We are in some very hard and severe economic times,'' Labor Secretary Hilda Solis said. ''The president and I are both not happy.''
Still, Solis thought it was too early to consider a second government stimulus, saying more time is needed for the current one to take hold. ''I do think the public needs to be patient,'' she said. ''We know they are hurting.''
Layoffs in May turned out to be smaller, 322,000, versus the 345,000 first reported. But job cuts in April were a bit deeper — 519,000 versus 504,000, according to government data.
Even with the 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.
For the second quarter, job losses averaged 436,000 a month. That was down from a monthly average of 691,000 in the first quarter.
And there was some other encouraging job news Thursday.
In a separate report, the department said the number of newly laid-off workers applying 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.
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.
Average weekly earnings fell from $613.34 in May, to $611.49 in June, the lowest in nearly a year and the first drop since March. That raises fresh questions about consumers' willingness to spend in the months ahead.
Many think the jobless rate could rise as high as 10.7 percent by the second quarter of next year before it starts to 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.
WASHINGTON: Employers cut a larger-than-expected 467,000 jobs in June and the unemployment rate climbed to a 26-year high of 9.5 percent.
Get the full article here.
Comments
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Anti-Politically Correct & Anti-GOP, OH
Posted 04:56 AM, 07/03/2009
Looks like the stimulus package was a big bust.....oh wait, they only bailed out the banks.
Posted 12:33 PM, 07/03/2009
Obama isn't doing squat to help this economy. This joke of a health care plan will do nothing but cost more money ... upwards of $1 trillion dollars. I don't know about you, but I'm sick of his wasting MY money! The guy is a complete failure!
Akron, OH
Posted 01:20 PM, 07/03/2009
Actually, you are wasting the Chinese people's money. And ultimately our children's money when the Chinese call in the debt. Three cheers for selling our kids into slavery!!!
North Canton, OH
Posted 11:36 PM, 07/03/2009
Wow, nice to see the Obama gov't giving all those wonderful tax dollars to employeed workers and Wall Street fat cats who cheated and robbed the working man...why must Obama continue the Bush-s**t?
