The US economy shed another 131,000 jobs in July, the second month in a row that jobs have been lost, the Labor Department has said. The private sector created 71,000 jobs, the government said. However, both figures were worse than expected.
Despite the overall fall in job numbers, the unemployment rate was unchanged at 9.5%. Many analysts are concerned that high unemployment is undermining the US economic recovery. The job losses sent US stocks sharply lower, with the Dow Jones index falling more than 1% in early trading, though the market later recovered slightly to close down 0.2% at 10653.56 points.They also hit European markets, with shares in London, Paris and Frankfurt ending the day down between 0.6% and 1.3%. The value of the dollar was also hit, falling nearly half a cent against the pound to $1.5983 and nearly a cent against the euro. One euro is now worth $1.3284.
The latest figures were hit by the loss of 143,000 temporary employees, who had been taken on to compile the US census but finished their work in July. In June, 225,000 census workers left employment. June was the first month that jobs across the whole economy had been lost on a month-on-month basis since October last year. Although the impact of the census explains the job losses, the July figures will fuel fears that the US economy is struggling to recover, particularly as the monthly jobs report is one of the most closely-watched economic indicators in the US. This is because private sector hiring remains weak. Manufacturing employment increased by 36,000, healthcare by 27,000 and mining by 7,000. "The modest gain in private sector jobs confirm that the economy remains on a slow growth path, and it's going to be a long haul to rev up the jobs machine," said Bart van Ark from research firm The Conference Board.
"The current pace of employment is too slow to replace the more than eight million jobs lost in the recession - not in the next year or two, perhaps even not in the next five years."
Figures released last week showed that US economic growth had slowed between April and June, with GDP growing by an annualised rate of 2.4% compared with 3.7% in the previous quarter.The housing market has also slowed in the past two months.But the US government insisted that the economy was not at risk of falling back into recession."I am not worried about a double dip," said White House economic adviser Christine Romer in an interview on MSNBC TV network, echoing comments made by President Obama on Thursday.
Posted in: USA News
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