Jobless rate jumps to 5-year high of 6.1 percent
From wire reports
WASHINGTON — The nation’s unemployment rate zoomed to a five-year high of 6.1 percent in August as employers slashed 84,000 jobs, dramatic proof of the mounting damage a deeply troubled economy is inflicting on workers and businesses alike.
The Labor Department’s report, released Friday, showed the increasing toll the housing, credit and financial crises are taking on the economy.
Wall Street initially fell after the Labor Department reported that payrolls shrank more than predicted last month and that the unemployment rate reached a five-year high. But stocks that had been pounded lower, including a huge drop on Thursday, were suddenly more attractive to investors willing to make some bets.
Oil prices also were affected by the report, sinking to $106.23 a barrel on the New York Mercantile Exchange —a five-month low — as a jump in the U.S. unemployment rate signaled to traders that Americans might keep paring back their energy use to save money.
The jobless rate jumped0.4 percent in August, up from 5.7 percent in July. It was the eighth month in a row that employers cut payrolls. Job losses in June and July turned out to be much deeper. The economy lost a whopping 100,000 jobs in June and another 60,000 in July, according to revised figures. Previously, the government reported job losses at 51,000 in each of those months.
So far this year, job losses totaled 605,000.
The latest snapshot was worse than economists were forecasting. They were predicting payrolls would drop by around 75,000 in August and the jobless rate to tick up a notch, to 5.8 percent.
“With the unemployment rate over 6 percent, it is a clear warning sign that this economy is continuing to soften faster than we thought. It is a real concern,” said Joel Naroff, president of Naroff Economic Advisors. “Businesses have decided to hunker down. They are not hiring, and they are paring workers where they can. That is making things pretty tough out there.”
The jobs numbers released by the Bureau of Labor Statistics point to continued slow growth. On top of this week’s Wall Street volatility, the continuing housing crisis and weak retail sales, many economists are again suggesting the U.S. economy may be on the brink of recession.
“The spike in the unemployment rate to 6.1 percent and the eighth month of continued job losses confirm that recessionary conditions persist in the labor market. Working families are in real trouble,” said Jared Bernstein, EPI senior economist for the liberal Economic Policy Institute.
Wall Street economists agreed and said they were most troubled by the jump of four-tenths of a percentage point in the jobless rate.
“The rapid rise in the unemployment rate points to a U.S. recession, as such an increase has never occurred outside of one,” Peter Kretzmer, a Bank of America economist, said in a note to investors. He said that since April, according to household surveys, an additional 1.75 million Americans are now unemployed.
Job losses in August were widespread, the government report showed.
Factories cut 61,000 jobs, with housing-related manufacturers and automakers among the hardest hit. Construction firms eliminated 8,000 jobs, retailers axed 20,000 slots, professional and business services slashed 53,000 positions and leisure and hospitality got rid of 4,000. Those losses swamped employment gains in the government, education and health.
Job losses at all private employers — not including government — came to 101,000 in August.
All told, the number of unemployed rose to 9.4 million in August, compared with 7.1 million a year ago. Economists predict more job losses ahead, pushing the jobless rate to 7 percent by the fall, according to some projections.
WASHINGTON — The nation’s unemployment rate zoomed to a five-year high of 6.1 percent in August as employers slashed 84,000 jobs, dramatic proof of the mounting damage a deeply troubled economy is inflicting on workers and businesses alike.
The Labor Department’s report, released Friday, showed the increasing toll the housing, credit and financial crises are taking on the economy.
Wall Street initially fell after the Labor Department reported that payrolls shrank more than predicted last month and that the unemployment rate reached a five-year high. But stocks that had been pounded lower, including a huge drop on Thursday, were suddenly more attractive to investors willing to make some bets.
Oil prices also were affected by the report, sinking to $106.23 a barrel on the New York Mercantile Exchange —a five-month low — as a jump in the U.S. unemployment rate signaled to traders that Americans might keep paring back their energy use to save money.
The jobless rate jumped0.4 percent in August, up from 5.7 percent in July. It was the eighth month in a row that employers cut payrolls. Job losses in June and July turned out to be much deeper. The economy lost a whopping 100,000 jobs in June and another 60,000 in July, according to revised figures. Previously, the government reported job losses at 51,000 in each of those months.
So far this year, job losses totaled 605,000.
The latest snapshot was worse than economists were forecasting. They were predicting payrolls would drop by around 75,000 in August and the jobless rate to tick up a notch, to 5.8 percent.
“With the unemployment rate over 6 percent, it is a clear warning sign that this economy is continuing to soften faster than we thought. It is a real concern,” said Joel Naroff, president of Naroff Economic Advisors. “Businesses have decided to hunker down. They are not hiring, and they are paring workers where they can. That is making things pretty tough out there.”
The jobs numbers released by the Bureau of Labor Statistics point to continued slow growth. On top of this week’s Wall Street volatility, the continuing housing crisis and weak retail sales, many economists are again suggesting the U.S. economy may be on the brink of recession.
“The spike in the unemployment rate to 6.1 percent and the eighth month of continued job losses confirm that recessionary conditions persist in the labor market. Working families are in real trouble,” said Jared Bernstein, EPI senior economist for the liberal Economic Policy Institute.
Wall Street economists agreed and said they were most troubled by the jump of four-tenths of a percentage point in the jobless rate.
“The rapid rise in the unemployment rate points to a U.S. recession, as such an increase has never occurred outside of one,” Peter Kretzmer, a Bank of America economist, said in a note to investors. He said that since April, according to household surveys, an additional 1.75 million Americans are now unemployed.
Job losses in August were widespread, the government report showed.
Factories cut 61,000 jobs, with housing-related manufacturers and automakers among the hardest hit. Construction firms eliminated 8,000 jobs, retailers axed 20,000 slots, professional and business services slashed 53,000 positions and leisure and hospitality got rid of 4,000. Those losses swamped employment gains in the government, education and health.
Job losses at all private employers — not including government — came to 101,000 in August.
All told, the number of unemployed rose to 9.4 million in August, compared with 7.1 million a year ago. Economists predict more job losses ahead, pushing the jobless rate to 7 percent by the fall, according to some projections.
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