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Sharp rise in US jobless figures

Jun 06 2008

Sharp rise in US jobless figures

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Economy

By Agencies

The ongoing mortgage crisis is one of the factors causing turmoil in the US economy [EPA]

The US unemployment rate has risen to 5.5 per cent from five per cent in May, the biggest such increase in more than 20 years, the US labour department says.

It reported on Friday that about 49,000 jobs were lost, putting the current number of unemployed in the US at 8.5 million.

A total of 324,000 jobs have been lost in 2008 so far, the department said.

The figure surprised analysts, who had expected a more modest rise of 0.1 per cent.

The news comes at a time of ongoing financial turmoil in the US housing, credit and financial sectors.

The White House acknowledged that the number was "too high" but Scott Stanzel, deputy press secretary, said it was still "lower than the average of the last three decades".

Analysts say the rate is expected to rise to six per cent or higher by next year.

The official unemployment rate, taken from a separate survey of households, includes workers who are actively seeking a job and can rise as jobless workers who had given up on looking for new work then begin searching again.

Recession fears

Continuing job losses have led some economists to say the US is in recession, although others have said far more jobs - 100,000 or more - are normally lost each month during a recession.

"For the average American there is not a debate that the economy is in a recession,'' Mark Zandi, chief economist at Moody's Economy website, told the Associated Press news agency.

"That's because their net worth is lower, their purchasing power is lower and it is tough to find a job. If you lose a job, it is tough to get back in."

Stocks fell on Wall Street following the news, with the Dow Jones index slumping by more than 200 points in morning trading.

The US Federal Reserve and the Bush administration are hoping recent steep rate cuts by the central bank and the US government's $168bn stimulus package, which provides tax rebates and business tax breaks, would revive the US economy in the second half of this year.