Saturday, July 9, 2011

US unemployment at highest level in '11

American job seekers pick up open job fliers from potential employers at Los Angeles Mission's 10th annual Skid Row Career Fair on June 2, 2011.

Source: Press TV

The US economy has generated lower than expected jobs over the past month, pushing unemployment to its highest level this year -- 9.2 percent.

The US Labor Department reported on Friday that the payrolls expanded by 18,000 in June. The unemployment rate was up one percent from May's rate of 9.1 percent, The Financial Times reported.

The data was significantly lower than the 105,000 forecast by economists in a Bloomberg poll, and show the lowest net job gain since September 2010.

The weak figures have dampened hopes that the world's largest economy being close to recovery after stumbling in recent months. The data have also heightened fears for the US economic recovery in the second half of 2011.

"It is disappointing. We may have built too much expectation into it. If you would have asked a month ago when we start to see these supply channel disruptions alleviated in the labor market, most people would have said July and not June. The market got a little bit hyped up hoping that the turn in the labor market would have been June. But it's not going to be until July,” Commonfund economist Michael Strauss said.

"When I look at some of the subcomponents in the report the biggest thing that we think is changing going forward is the manufacturing sector, which has been flat 13 straight months.”

"There's going to be a market reaction today in the equity market. There's going to be a market reaction in general. I think the bigger issue is we're going to have to wait another month and it should have really been a July/August event. If conditions are going to get better, the hint that you would probably need to see is a reduction in initial unemployment claims and we are likely to see that in late July or early August," Strauss concluded.

The US economy typically needs to add 125,000 jobs a month just to keep up with population growth. And at least twice that many jobs are needed to bring down the unemployment rate.

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