Money Matters - Simplified

US jobless rate rises to 9.2% in June

Prior to May, from February through April, an average of 215,000 jobs per month was added. These 3 months set the stage for the long-awaited rebound in the job market. But, it was not to be.

Hiring in the United States slowed down considerably last month raising apprehensions that the lukewarm recovery witnessed so far has stalled out.

A net of merely 18,000 jobs were generated in June, sending the unemployment rate to the highest of the year so far at 9.2 percent.

Worse than May figures
While businesses created 57,000 jobs, the government sector slashed 39,000 jobs last month.

May, with 25,000 additions, too was a weak month when it came to hiring. The dismal report in May was considered to be a aberration, and was attributed to temporary factors including the earthquake in Japan.

Prior to May, from February through April, an average of 215,000 jobs per month was added. These 3 months set the stage for the long-awaited rebound in the job market. But, it was not to be.

“June’s employment report doesn’t have a single redeeming feature. It’s awful from start to finish,” said Paul Ashworth, an economist at Capital Economics.”

Another important indicator of employment activity, the average weekly work hours, declined in June by 0.1 to 34.3 leading to loss of income for many workers.

Given the rate of growth of working-age population, the U.S. economy needs to create 125,000 jobs month on month to keep the unemployment rate stable.

The tally of idled people in the United States now stands at 14 million. Of these, 50 percent have been out of job for six months or more.

“Our economy as a whole just isn’t producing nearly enough jobs for everybody who is looking,” President Barack Obama said during a speech in the Rose Garden.

Pressure on Obama administration
Another important indicator of employment activity, the average weekly work hours, declined in June by 0.1 to 34.3 leading to loss of income for many workers.

“They're not generating goods and services and the incomes which would cause the economy to expand and make all of us better off,” said Patrick O'Keefe, economic research director at accounting and advisory firm J.H. Cohn.

The latest employment report may force the Federal Reserve not to raise the interest rates, at least as of now.

Meanwhile, opposition members have started accusing the Obama administration of continuing with impotent policy measures.

“These abysmal numbers underscore the fact that current economic policies are not working. We urgently need to remove impediments to growth and job creation,” said Martin Regalia, chief economist at the US Chamber of Commerce.