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June jobs loss rises: Unemployment reaches 9.5%; weekly wages fall
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Published: July 3, 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. Workers also saw weekly wages fall, suggesting that Americans will have little appetite to spend and the economy's road to recovery will be bumpy.
The Labor Department report, released yesterday, showed that even as the recession flashes signs of easing, companies likely will want to keep a lid on costs and be wary of hiring until they feel certain that the economy is on solid ground.
President 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 almost a year.
However, 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 that the jobless rate will hit 10 percent this year, and keep rising into next year, before falling back.
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 records dating 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, the president of ClearView Economics.
On Wall Street, the employment news pulled stocks lower.
The Dow Jones industrials fell 219.09, or 2.6 percent, to 8,284.97 as trades were still being settled. The Standard & Poor's 500 index was down 26.25, or 2.8 percent, to 897.08 and the Nasdaq composite index fell 49.20, or 2.7 percent, to 1,796.52.
Since the recession began in December 2007, the economy has lost a net total of 6.5 million jobs.
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 in an interview. "The president and I are both not happy."
Still, Solis said she thought that it was too early to consider a second government stimulus, saying that 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, compared to the 345,000 first reported. But job cuts in April were a bit deeper -- 519,000 compared to 504,000, according to government data.
Even with 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 yesterday.
In a separate report, the department said that the number of newly laid-off workers filing applications 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.
Meanwhile, the Commerce Department said that orders placed with U.S. factories rose 1.2 percent in May, the most in 11 months. The increase also was better than economists expected.
Still, 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.
One of the few industries adding jobs: education and health services, which added 34,000 positions last month and 47,000 in May.
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