Unemployment in the US and Europe continue to rise to levels not seen for a decade or more.
The US Labor Department reported that June unemployed jumped by 467,000, far more than the 325,000- 363,000 range predicted in pre release surveys.
It was the worst loss for the past four months and was seen as a sign that the US economy is not getting better, as some would have us believe, but it probably isn’t getting worse.
It was a worrying development because it stopped four months of easing jobless numbers that had gotten some analysts wondering if the economy was travelling a bit better than expected.
Job losses were widespread, another worrying sign.
That left the unemployment rate at 9.5%, up slightly from the 9.4% rate of May. That’s still the highest since 1983.
The department said Job losses were widespread across the major industry sectors, with large declines occurring in manufacturing, professional and business services, and construction.
The steepest declines in services, which fell 244,000 after a 107,000 drop in May; professional and business services fell 118,000, while government employment fell 52,000 (They have been very strong for months now). Manufacturing was one of the few sectors to show a smaller drop in June, falling 136,000 after a 156,000 slump in May.
The department said that job losses from April to June averaged 436,000 per month, compared with losses averaging 670,000 per month from November to March.
Since the recession began in December 2007, 6.5 million jobs have been lost.
The participating rate was 59.5, down 3.2 percentage points since the recession started (In Australia its around 65.2).
Separately, the department said the number of people making unemployment benefits claims last week fell in line with forecasts, but still remained above 600,000 where they’ve been for most of the year.
the department said initial jobless claims dropped by 16,000 to 614,000 in the week ended June 27, from a revised 630,000 the week before.
The number of people collecting unemployment insurance decreased by 53,000 in the prior week, to 6.7 million and the four-week moving average of initial claims, a less volatile indicator, fell to 615,250 from 618,000.
May’s original loss of 345,000 was revised to 322,000, according to the latest report. April’s were revised to 519,000.
Average hourly earnings were flat at $US18.53 in June, (Earnings are up 2.7% in the past year to June after being up 3.1% in the year to May). Average weekly earnings have risen by only 0.9%, reflecting a decline in the average workweek in the US in that time .
The average workweek fell six minutes to 33.0 hours, the lowest ever recorded in the series which started in 1964. Hours worked fell 0.8%. (But rose slightly in manufacturing).
In Europe, unemployment in the 16 countries using the euro climbed to a 10-year high of 9.5% in May after 273,000 jobs were lost across the zone.
It was the highest level of unemployment since May 1999, the European Union’s Eurostat data agency estimated.
The May unemployment rate was up from 9.3 % in April and 7.4% in May of last year.
In the 27-nation EU the unemployment rate rose in May to 8.9%, the highest level since June 2005 with 385,000 jobs were lost.
Eurostat estimated that in total 21.5 million people were unemployed across the EU in May, of which 15.0 million were in the euro area.
"Among the Member States, the lowest unemployment rates were recorded in the Netherlands (3.2%) and Austria (4.3%), and the highest rates in Spain (18.7%), Latvia (16.3%) and Estonia (15.6%).
"Compared with a year ago, all Member States recorded an increase in their unemployment rate. The lowest increases were observed in Germany (7.4% to 7.7%) and the Netherlands (2.8% to 3.2%). The highest increases were registered in Estonia (3.9% to 15.6%), Latvia (6.1% to 16.3%) and Lithuania (4.7% to 14.3%)," Eurostat reported. In Ireland the jobless rate hit 11.9%.
Figures out also confirmed that deflation still grips the wider economy with producer prices falling by 0.2% in a preliminary report for June, after being down 0.9% in May.
Meanwhile the European Central Bank left its main refinancing interest rate unchanged at a record low of 1.0% overnight Thursday, as expected by the market.
A leading US economist has conjured up another metaphor, drawn from both the playground and the alphabet to describe the path of the US economy in the next year.
And where the US goes, so goes the world, especially in manufacturing.
Stockmarkets may have decoupled, especially in China and the like, but when it comes to the chances of a sustainable burst of growth, we are all coupled to the US and nothing will improve until they get their house in order, domestic Chinese stimulus and all.
Martin Feldstein is a prominent Harvard economist and a member of the panel that defines US recessions (That’s the group that called the US recession from December 2007 till now).
He’s forecast the US economy would have "a temporary and substantial recovery this year", but would be falling into 2010. He told Bloomberg that economy would "seesaw":
"Feldstein — a member of the private panel that dates the start of recessions and recoveries — suggested the economy will contract into next year, and that the pattern of economic turnaround will be more of a seesaw than what he called “a beautiful symmetrical W," Bloomberg reported.
Hmmm, ”seesaw", "W: it all sounds like an escalation in imagery from the V, L and U-shaped recoveries used by other economists.
