Chicago Tribune (MCT)
CHICAGO — U.S. employers chopped 62,000 workers from their payrolls in June, the Labor Department reported Thursday, the sixth consecutive month in which the nation's stumbling economy has lost jobs.
The jobless rate was 5.5 percent, unchanged from May but significantly higher than the 4.6 percent level of a year ago. Many experts expect unemployment to climb above 6 percent by early 2009. In addition, the already soft reports from April and May were revised downward, indicating further weakness in the job market.
"The labor market continues to contract at a steady pace," Moody's Economy.com economist Sophia Koropeckyj said Thursday, "and the weakness that originated in the housing market has broadened to encompass nearly the entire economy."
Despite the weak report, economists pointed out that job losses are far less than accompanied the last recession in 2001.
June's job decline was once again paced by employment drops in the manufacturing and construction sectors, but the latest report also showed unemployment on the rise among white-collar workers and in some parts of the service sector.
The downturn in Thursday's report was in line with economists' forecasts. Still, for a number of observers, the lackluster performance — coming at a time when the federal government is winding down its multibillion-dollar fiscal stimulus tax rebate effort — offers strong evidence that the economy faces even rougher weather in coming months.
"Tax rebate spending is helping, temporarily," said High Frequency Economics' Ian Shepherdson, but he warned there is "worse to come" for the economy when the stimulus ends.
The U.S. economy needs to create more than 100,000 new jobs monthly just to accommodate a growing workforce, and when jobs show an outright decline, as they have for past half year, it is considered clear evidence of a troubled economy.
Nonetheless, the employment falloff so far remains more moderate than the plunge that the labor market usually takes during a recession. As a result, Thursday's data only fueled the ongoing disagreement among economists as to whether the U.S. has entered (or is about to enter) an outright recession, or whether it is instead stumbling through a lengthy flat patch.
The latest jobs report showed "moderate job losses consistent with a nearly stagnant, but not recessionary, U.S. economy," said Danske Bank economist Peter Possing Andersen.
While "quite weak," said JPMorgan economist Michael Feroli, the U.S. jobs market has yet to register the 100,000-plus monthly declines in payrolls "symptomatic of normal recession episodes."
In the report, the Labor Department adjusted its April and May reports downward, increasing by 52,000 the total number of jobs lost in those two months. Through the first half of 2008, the U.S. economy shed 438,000 jobs, for an average loss of 73,000 per month.
The current job declines should be kept "in perspective," Feroli said, noting that the nation's average monthly job loss during the 2001 recession, adjusted for 2008 labor pool population, was 209,000 jobs.
The manufacturing sector lost another 33,000 jobs in June, the Labor Department noted, while the nation's construction industry shed an additional 43,000 jobs. Those declines, combined with a 7,000-job drop in the retail sector and a 51,000-job tumble in professional and business service employment, overshadowed modest job creation in government, leisure and hospitality, and education and health services.
The number of unemployed Americans stood at 8.5 million in June, compared with a 7 million a year ago. Manufacturing has lost 353,000 jobs over the past 12 months, while the construction sector has seen employment tumble by 528,000 since its peak in September 2006.
In other news Thursday, the government reported that initial claims for unemployment insurance increased 16,000 last week, to 404,000. The four-week average of such claims, which economists follow closely because it is less volatile, was 390,500, its highest reading since September 2003 except for a week after Hurricane Katrina hit.
(c) 2008, Chicago Tribune.
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