Jobless rate edged up to 5.9 percent in June
Friday, July 5th 2002, 12:00 am
News On 6
WASHINGTON (AP) _ The nation's unemployment rate edged up to 5.9 percent in June as the lingering effects of last year's recession continued to make life difficult for job hunters.
The Labor Department's latest snapshot of the job market released Friday also showed that 36,000 jobs were created in June, on top of a 24,000 increase the month before.
But job growth wasn't strong enough to prevent the unemployment rate from rising in June from May's 5.8 percent rate.
Many analysts were predicting the jobless rate would nudge up in June but they were forecasting much stronger job growth with payrolls increasing by 75,000. Job losses in manufacturing and in the retail sector, including car dealerships and department stores, blunted gains elsewhere, making for tepid job creation during the month.
On Wall Street, the employment news didn't get investors down. The Dow Jones industrial average gained 221 points and the Nasdaq was up 49 in morning trading.
As other parts of the economy are gaining ground after the slump, the labor market is continuing to suffer from some of the fallout.
Companies whose profits and revenues took a hit during the slump have been worried about the recovery's staying power and have been wary of making big commitments in hiring and in capital investment.
``There is just not the confidence in the recovery on the part of employers to venture out and start reloading _ hiring back workers,'' said economist Ken Mayland, president of ClearView Economics.
Labor Secretary Elaine Chao _ who acknowledged that the economic recovery isn't proceeding as quickly as she had hoped _ agreed with that assessment.
Her advice to those out of work: ``Take a deep breath and don't panic.''
Speaking with reporters, Chao urged people out of work to take advantage of government programs that aim to help them not only find a new job, but deal with other issues including pensions and health care. ``They should not lose heart,'' she said.
Citing uncertainties about the recovery's vitality, Federal Reserve policy-makers left short-term interest rates at 40-year lows last week, the fourth time this year they held rates steady.
Mayland believed Friday's report raises the odds that the Fed will stay on the sidelines for the rest of this year and put off an interest-rate increase until next year.
Americans' confidence in the economy, as measured by the Conference Board, fell in June to a four-month low, pulled down by accounting scandals and worries about jobs.
Some economists worry that rising unemployment could make consumers _ whose spending accounts for two-thirds of all economic activity in the United States _ less willing to spend, something that would slow the economic recovery.
The nation's manufacturers were hardest hit by the recession and saw hundreds of thousands of jobs evaporate. Even though the industry is on the comeback trail, it is continuing to shed workers.
Factories cut 23,000 jobs in June, on top of 27,000 in May. Still, the industry's job losses are moderating, the government said.
Between March 2001 and January of this year, manufacturing had lost an average of 115,000 jobs a month. In comparison, job losses averaged 63,000 a month in February and March, and 24,000 a month in April through June.
Retailers cut 18,000 jobs in June, after a loss of 22,000 the month before. The industry has lost 186,000 jobs since its recent peak in July of last year.
But construction companies added 14,000 jobs in June. Employment in health services went up by 34,000, mainly in hospitals, and 33,000 jobs were added in finance, insurance and real estate.
The government on Wednesday reported that new claims for unemployment benefits dropped to a 15-month low last week, suggesting that companies are reducing layoffs.
But economists said that even if companies reduce the speed at which they lay off workers, the jobless rate probably would continue to rise. They said it would take time for companies to feel more secure about the economic recovery and step up hiring.
Some economists believe the unemployment rate could rise as high as 6.5 percent by the fall, perhaps hold steady and then start going down.