U.S. Payrolls Fall More Than Forecast

Employers in the U.S. cut 467,000 jobs in June, the unemployment rate rose and hourly earnings stagnated, offering little evidence the Obama administration’s stimulus package is shoring up the labor marke

The payroll decline was more than forecast and followed a 322,000 drop in May, according to Labor Department figures released today in Washington. The jobless rate jumped to 9.5 percent, the highest since August 1983, from 9.4 percent.

Unemployment is projected to keep rising for the rest of the year just as the income boost from the stimulus package fades, undermining prospects for a sustained rebound in household purchases, analysts said. As companies from General Motors Corp. to Kimberly-Clark Corp. cut costs, the lack of jobs will limit any recovery.

Equity-index futures extended losses, with contracts on the Standard & Poor’s 500 Stock Index falling 1.3 percent to 907.00 at 8:36 a.m. in New York. Treasuries rose, sending yields on benchmark 10-year notes to 3.510 percent from 3.538 percent late yesterday.

The number of Americans filing claims for unemployment benefits last week fell in line with forecasts, Labor also said, indicating firings remain elevated. Initial jobless claims dropped by 16,000 to 614,000 in the week ended June 27, from a revised 630,000 the week before.

Revisions added 8,000 to payroll figures previously reported for May and April.

The world’s largest economy has lost about 6.5 million jobs since the recession began in December 2007. That’s the biggest drop in any post-World War II economic slump.

Today’s report showed factory payrolls fell by 136,000 after decreasing 156,000 the prior month. Economists forecast a drop of 150,000. The drop included a decline of 26,500 jobs in auto manufacturing and parts industries.

More firings are in the works following the bankruptcies of GM and Chrysler LLC as shutdowns ripple through auto-parts makers and car dealers.

Payrolls at builders fell 79,000 after decreasing 48,000.

Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 244,000 workers after falling 107,000. Retail payrolls decreased by 21,000 after a 17,600 drop. Financial firms reduced payrolls by 27,000, after a 30,000 drop the prior month.

Government payrolls decreased by 52,000, the biggest decline since July 2007, after dropping 10,000 the prior month.

The decrease reflects the layoff of workers hired on a temporary basis to prepare for the 2010 census. The U.S. Census Bureau has said it will hire more than 1.4 million people over the next year to conduct the population count that happens once every 10 years.

U.S. Payrolls Fall More Than Forecast

TradingEconomics.com, Bloomberg
7/7/2009 12:14:30 PM