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(CEP News) - Following a half-percentage point surge to 5.5% in the unemployment rate for May, economists expect some moderation to 5.4% in the June employment situation report, though outlooks for the medium-term expect to see that figure to continue rising.
Nigel Gault, chief U.S. economist at Global Insight, said "it will be a surprise if it doesn't go down." He said the previous month's 5.0% rate was inexplicably low, but the rise in the rate last month was likely overshot. May's unemployment rate was the highest rate since 2004, and the half-percentage monthly gain was the largest jump since 1986. Abiel Reinhart, U.S. economist at JPMorgan Chase, said softness in the labour market is widespread, and while he expects the unemployment rate to tick down in Thursday's report, he expects it to continue to rise until it hits 5.7% by 2009. Going further, Paul Ashworth, senior U.S. economist at Capital Economics, expects the unemployment rate to remain at 5.5% in June, adding that he won't be surprised to see that figure rise to 6.0% by the end of the year. He said the labour spread in the Conference Board's consumer confidence survey is a good indicator of the unemployment rate, and "it currently points to something like 5.8%." If the payrolls report begins to report declines of 100k each month, it won't take long for the unemployment rate to see another cumulative half-percentage point change, he said. By Patrick McGee,
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