Jobs Cuts Slowed in Second Quarter
Layoffs in May turned out to smaller, 322,000, versus the 345,000 first reported. But job cuts in April were a bit deeper -- 519,000 versus 504,000, according to government data.
Even with higher pace of job cuts in June, the report indicates that the worst of the layoffs have passed. The deepest job cuts of the recession came in January, when 741,000 jobs vanished, the most in any month since 1949.
For the second quarter, job losses averaged 436,000 a month. That was down from a monthly average of 691,000 in the first quarter. Economists predict the economy will continue to lose jobs through the rest of this year, although they hope at a slower pace.
And there was some other encouraging job news Thursday.
In a separate report, the department said the number of newly laid-off workers filing applications for unemployment benefits fell last week to 614,000, in line with economists' predictions. The number of people continuing to draw benefits unexpectedly dropped to 6.7 million.
Meanwhile, the Commerce Department said orders placed with U.S. factories rose 1.2 percent in May, the most in 11 months. The increase also was better than economists expected.
Still, job losses last month were widespread.
Professional and business services slashed 118,000 jobs, more than double the 48,000 cut in May. Manufacturers cut 136,000, down from 156,000. Construction companies got rid of 79,000 jobs, up from 48,000 the previous month. Retailers eliminated 21,000, up from 17,600. Financial activities cut 27,000, following 30,000 in May. The government cut 52,000 jobs, up from 10,000 the previous month. Leisure and hospitality cut 18,000 jobs, erasing a gain of the same size in May.
One of the few industries adding jobs: education and health services, which added 34,000 positions last month and 47,000 in May.
Mayland and other economists said a good chunk of June's job losses likely were affected by shutdowns at General Motors Corp. and fallout from the troubled auto industry, which should let up later this summer. The government said employment at factories making autos and parts fell by 27,000 last month.
Payroll losses and the unemployment rate are derived from two separate statistical surveys. The jobless rate probably would have moved higher if not for people dropping out of the labor force.
With the weakness in the job market, workers saw wages drop in June.
Averageweekly earnings fell from $613.34 in May, to $611.49 in June, thelowest level in nearly a year and the first drop since March. Thatraises fresh questions about consumers' willingness to spend in themonths ahead.
The worst crises in the housing, credit andfinancial markets since the 1930s have plunged the country into thelongest recession since World War II.
Many think the joblessrate could rise as high as 10.7 percent by the second quarter of nextyear before it starts to make a slow descent. Some think the rate willtop out at 11 percent. The post-World War II high was 10.8 percent atthe end of 1982, when the country had suffered through a severerecession.
Federal Reserve Chairman Ben Bernanke predicts therecession will end this year, with many economists forecasting that theeconomy will start to grow again as soon as the current July-Septemberquarter.
But recoveries after financial crises tend to be slow,which is why economists predict it will take years for the job marketto return to normal. Some predict the nation's unemployment rate won'tdrop to 5 percent until 2013.
An elevated unemployment ratecould become a political liability for President Barack Obama whencongressional elections are held next year. The last time theunemployment rate topped 10 percent, the party of the president -- thenRonald Reagan's GOP -- lost 26 House seats in midterm elections in 1982.
Sofar, many people are saving -- rather than spending -- the extra moneyin their paychecks from Obama's tax cut, blunting its help in bracingthe economy. Much of the economic benefit of Obama's increasedgovernment spending on big public works projects won't kick in until2010, analysts say.
The White House last week said federal moneywas being shoveled out of Washington quickly, but states aren'tsteering the cash to counties that need jobs the most.
Large jobcuts have continued this week. Newspaper publisher Gannett Co. said itplans to cut 1,400 jobs in the next few weeks, about 3 percent of thework force, as it faces a prolonged slump in advertising revenue. Farmmachinery company Deere & Co. said 800 salaried employees, or 3percent of its salaried work force, took a voluntary buyout offer.
(Copyright 2009 by The Associated Press. All Rights Reserved.)
