U.S. Job Losses Spike in June
WASHINGTON (Reuters) – U.S. employers cut far more jobs than expected last month and the unemployment rate hit a nearly 26-year high of 9.5 percent, underscoring the likelihood of a long and slow recovery from recession.
The loss of 467,000 jobs reported by the Labor Department on Thursday was 100,000 more than Wall Street economists had expected and was spread widely across economic sectors.
The economy has lost 6.5 million nonfarm jobs since the recession began in December 2007 and the unemployment rate has nearly doubled in that time.
"It looks like the economy was still losing substantial momentum as the second quarter came to a close. This report is weak across the board," said William Sullivan, chief economist at the JVB Financial Group in Boca Raton, Florida.
The Dow Jones industrial average fell 2.0 percent as investors worried that the data darkened the recovery outlook.
A later report of a stronger-than-expected increase in U.S. factory orders for May failed to restore confidence.
Prices for U.S. Treasury debt, normally seen as a safe bet during hard times, rose and the dollar fell against the Japanese yen, considered a haven for investors.
Also on Thursday, data showed unemployment in the 16-nation euro zone rose to a 10-year high of 9.5 percent in May.
America's June jobless rate of 9.5 percent was up from 9.4 percent in May and was the highest since a matching rate in August 1983. Analysts had expected it to rise to 9.6 percent.
Monthly job losses peaked in January at 741,000 and had decreased each month since then until June, an indication that the pace of the economy's deterioration had been slowing.
The unemployment rate has continued to rise.
Since the recession started in December 2007, U.S. payroll employment has dropped by a total of 6.5 million.
The Labor Department revised figures for April and May to show a net 8,000 fewer jobs were lost in those months than previously reported. The May job losses were revised downward to 322,000, while April losses were revised upward to 519,000.
"The only saving grace is that the decline in payrolls may not be as large as we saw at the start of the year," JVB's Sullivan said.
SIGNS OF HOPE
A separate report, however, offered some hope that pressure on the labor market was starting to fade.
The Labor Department said first-time claims for state unemployment insurance benefits fell to 614,000 in the week ended June 27 from an upwardly revised 630,000 the prior week.
In another hopeful sign, the number of people still on jobless aid rolls after claiming an initial week of aid fell to just over 6.70 million in the week to June 20 from an upwardly revised 6.76 million a week earlier, only the third week this year that "continued claims" had dropped.
Separately, the Commerce Department reported that orders for U.S. manufactured goods in May rose 1.2 percent, their largest increase in nearly a year, beating analysts' median forecast for a 0.8 percent rise.
Non-defense capital goods excluding aircraft, considered a measure of manufacturing activity, rose 4.7 percent in May following a 3.5 percent fall in April.
SERVICES SECTORS HIT HARD
While June's job losses were spread across all sectors, the steepest decline was in services, which fell 244,000 after a 107,000 drop in May. Professional and business services lost 118,000 jobs, while government employment fell 52,000.
Manufacturing was one of the few areas to show a smaller drop in June, down 136,000 after a 156,000 fall in May.