Unemployment Continue to Rise in the United States as Companies Layoff 467K Employees in June!!!

The U.S. labor market continue to suffer from great weakness, as rising unemployment continue to undermine economic growth in the world's largest economy, in addition to tightened credit conditions, and diminishing wealth, as all continue to weigh down on consumer spending which account for nearly 2/3 of economic activity in the United States.

The infamous jobs report indicated today that the unemployment rate rose in June to the highest level since 1983 at 9.5% from the prior estimate of 9.4% and slightly better than median estimates of 9.6%, as the non-farm payrolls signaled that 467,000 workers lost their jobs in June following the prior revised estimate of -322,000 jobs lost back in May, and worse than median estimates of 365,000 jobs lost.

Manufacturers shed 136,000 jobs in June, while the construction sector shed 79 thousand jobs, and service providing companies shed 244,000 jobs, including 51,000 in the trade-support sectors, while retailers shed 21,000 jobs, financial shed 27,000 jobs, business services shed 118,000 jobs, while education-health sectors added 34,000 jobs, and the government shed 52,000 jobs.

Meanwhile, average hourly earnings were flat in June following the prior revised rise of 0.2% reported back in May, while compared with a year earlier average hourly earnings rose 2.7% in June following the prior revised rise of 3.0%, also average weekly hours dropped to 33.0 from the prior and expected estimate of 33.1.

Moreover, the initial jobless claims for the week ending June 27 dropped by 16,000 to 614,0000 from the prior revised estimate of 630,000, while continuing claims dropped in the week ending June 20 to 6.702 million from the prior revised estimate of 6.755 million.

The labor market in the United States has been weakening severely over the last period, as companies continued to reduce their workforce amid the ongoing recession, however companies seem to have ease the pace of layoffs over the last two months, yet conditions in the labor market are still challenging despite the fiscal stimulus, which is supposed to be able to add more than half a million jobs.

Accordingly, one might expect that the severe contraction in the labor market won't be erased easily, which means that we might as well expect the unemployment rate to continue rising over the course of this year.

Analysts expect the unemployment to rise well above 10% before this year end, while some even expect the unemployment rate to reach 11% over the course of next year, however i don't believe unemployment will reach 11% but will probably reach 10% and hover around it for a while before unemployment starts to drop over the course of next year.

The economy is seemingly stabilizing as several sectors seem to have reached the bottom over the past few months, and accordingly expectations of a soon to come recovery ignited hopes among investors that the worst of this crisis is now behind us, however I wouldn't get too excited, as once again; rising unemployment will cause serious problems and might indeed lead the economy back into recession, which would mean the economy will experience a “W” recession.

Ecpulse

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