The Fed is set to keep rates unchanged because of inflationary pressures [EPA]

The latest data, released by the US labour department on Friday, showed a lack of credit had affected employers' expansion plans and willingness to hire.

The reductions marked the seventh straight month where employers eliminated jobs.

So far, the US economy has lost a total of 463,000 jobs this year.

An increase in the unemployment rate to 5.7 per cent from 5.5 per cent came in June when many young people streamed into the labour market looking for summer jobs.

But this year, fewer of them were able to find work, the government said.

The unemployment rate for teenagers jumped to 20.3 per cent, the highest since late 1992.

The faltering labour market is a source of anxiety not only for those looking for work, but also for those worried about keeping their jobs during uncertain times.

Company job cuts

Chrysler LLC, GM, Wachovia Corp., Cox Enterprises Inc and Pfizer are among several companies that have announced job cuts in July.

GM filed a report on Friday showing the third-worst quarterly loss in its history in the second quarter as north American vehicle sales plummeted and the company faced expenses due to labor unrest and its massive restructuring plan.

GM announced a plan to raise $15bn on July 15 for its restructuring by laying off thousands of hourly and salaried workers, speeding the closure of lorry and 4WD vehicle plants, suspending its dividend and raising cash through borrowing and the sale of assets.

GM also said it would reduce production by another 300,000 vehicles, and that could prompt another wave of blue-collar early retirement and buyout offers.

Bennigan's restaurants owned by privately held Metromedia Restaurant Group, are closing, driving more people to unemployment lines.

A fallout from the housing slump and high energy prices also are weighing on employers.

More job cuts

Job losses have further hit the housing, credit and financial debacles.

Manufacturers cut 35,000 positions, construction companies got rid of 22,000 and retailers shed 17,000 jobs.

Meanwhile, spending on construction projects around the country dropped 0.4 per cent in June as cutbacks in home building eclipsed gains in commercial construction, the US commerce department said.

The Institute for Supply Management's reading of activity from the country's producers of cars, airplanes, appliances and other manufactured goods hit 50, down from 50.2 in June. Readings above 50 signals growth.

Temporary help firms, also viewed as a barometer of demand for future hiring, eliminated 29,000 jobs. Those losses swamped job gains elsewhere, including in the government, education and health care.

In May and June combined, the economy lost 98,000 jobs, according to revised figures. That was not as bad as the 124,000 reductions previously reported.

Job cuts are expected in coming months making the economy a major concern of voters who will figure prominently in their choices for America's next president come November.

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