Unemployment in the US Falls as Recession Eases

Job losses
The pace of U.S. job losses slowed more than analyst forecasted last month and the unemployment rate dropped for the first time in more than a year, the clearest signs the worst slump since the Great Depression may be ending.

The overall payrolls fell by 247,000 (9.4%), down from 443,000 (9.5%) loss in June, the Labor Department said yesterday in Washington.

The positive report on payroll data has sent stock indexes soaring to their highs for the year and 10-year Treasuries to their worst week since 2003. The White House warned the jobless rate is still likely to reach the 10 percent rate as forecasted earlier, with companies such as Boeing Co., Verizon Communications Inc.and Emerson Electric still continuing in cut costs strategy, any rebound in hiring is expected to come in 2010.

President Barack Obama, speaking at the White House hours after the jobs report, said the unemployment numbers indicate “the worst may be behind us” for the recession.

The average losses of 331,000 in the past three months are less than half the pace of decline in the first quarter of this year given job losses peaked to 741,000 in January 2009, the most since post world war II.

According to survey by Bloomberg, the overall payroll rate may top 10 percent by early next year and an average at a rate 9.8 percent for 2010.

The manufacturing-factory payrolls fell 52,000, the fewest in a year compared to a decrease of 131,000 in the prior month. That drop came even as the automobile industry added 28,200 jobs as return of workers at General Motors Co. and Chrysler Group LLC, which have exited bankruptcy.

For the service industries, which include banks, insurance companies, restaurants and retailers, subtracted 119,000 workers, an improvement from a loss of 220,000 in June. Retail payrolls fell by 44,100.

Government payrolls rose by 7,000 after falling 48,000.

Consumer Spending

Even so, economists predict consumer spending, which accounts for 70 percent of the economy, will be slow to gain speed. Wages and salaries fell 4.7 percent in the 12 months through June, the biggest drop since records began in 1960, according to Commerce Department data issued Aug. 4.

Companies like Verizon and Boeing are still curtailing their expenses. New York-based telephone carrier Verizon last month said it may slash more than 8,000 jobs in the second half.

Chicago-based Boeing, which is planning to job cuts of about 10,000 workers, or 6 percent of its labor force, has agreed to allow some machinists to volunteer for a “layoff with benefits” to help mitigate job cuts, the International Association of Machinists and Aerospace Workers said July 28.

Emerson Electric Co., a maker of industrial equipment, will cut an additional 5,000 to 6,000 positions in the next few quarters, after it posted its third straight drop in quarterly earnings, the longest stretch since 2002. The company has already eliminated 20,000 jobs to date.

The unemployment rate may not peak until the second half of 2010, Treasury Secretary Timothy Geithner said on ABC last week, even as the economy shows signs of improvement.