U.S. unemployment rate climbs to 4-year high in July
The unemployment rate in the United States rose to 5.7 per cent — a four-year high — as employers reduced payrolls by 51,000 jobs in July, the U.S. Labour Department said Friday.
Unemployment in June stood at 5.5 per cent.
The tumble in payrolls was not as bad as some economists had been expecting. Projections had pointed to a cut of 72,000 jobs in July.
The U.S. economy has now lost 463,000 jobs this year. July's losses were the seventh straight monthly contraction in employment.
The unemployment rate in the U.S. increased as students joined the workforce to hunt for summer jobs.
Conditions for them are proving difficult this year, as teenage unemployment hit 20.3 per cent, the highest level since late 1992.
Among sectors hit hard by the weak U.S. economy, the manufacturing sector cut 35,000 jobs, while construction firms cut 22,000 workers. Retailers eliminated 17,000 jobs. Those losses overshadowed employment gains in government, education and health care.
"Without a turnaround in labour markets and job creation, there is the risk that 2008 could finish like 2007, with growth turning mildly negative," RBC assistant chief economist Paul Ferley said.
"In the face of this risk, we expect the [Federal Reserve] to continue to hold Fed funds at its current stimulative level of 2 per cent into the middle of next year to try and foster some strengthening in labour markets."
Millan Mulraine, an economics strategist at TD Securities, said that with demand for products weakening, "U.S. businesses are likely to continue economizing on their use of labour services, which will likely result in further job losses down the road."
Job figures for Canada for July will be released on Aug. 8.
The Canadian unemployment rate in June edged up 0.1 percentage points to 6.2 per cent.
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