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US job losses worse than expected

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Date: Thursday 03 Jul 2008

LONDON (ShareCast) - US employers shed jobs in June, as they have done every month this year, as the downturn in the US economy and rising raw material costs prompted another bout of belt-tightening.

Non-farm payrolls declined by 62,000 in June, following an upwards revised 62,000 fall in May. The decline was larger than expected; analysts had been predicting a fall in the range of 40,000 to 60,000.

Total job losses for the first half of 2008 totalled 438,000, in contrast to 2007, when on average 91,000 new jobs were created each month.

The downtrend trend in employment levels is prompting some observers to declare the US is experiencing a recession, although more typically a recession is defined by economists as a period of two or more successive quarters when economic growth is negative.

Payrolls at builders dived 43,000 after sliding 37,000 in May, reflecting continuing fall-out from the US house price slump and the sub-prime mortgage lending crisis.

Factory payrolls fell by 33,000 after easing 22,000 in May, as industry sought to reduce its cost base in order to maintain margins eroded by the high raw material prices.

Service industries, which includes banks, insurance companies, retailers and restaurants, added 7,000 jobs in June after May’s 8,000 fall, but this disguised a loss of 7,500 jobs in the retail sector.

The jobless rate remained unchanged at 5.5% after rising sharply in May.

Initial jobless claims last week burst through the 400,000 mark, rising more than expected by 16,000 to 404,000.

The moving four-week average of new claims for unemployment benefit rose 10,250 to 390,500, its highest level since October 2005.

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