RTTNews - Reflecting continued weakness in the labor market, the Labor Department released a report on Thursday showing that employment fell by much more than expected in the month of June, pushing the unemployment rate up to a new twenty-five year high.
The report showed that non-farm payroll employment fell by 467,000 jobs in June following a revised decrease of 322,000 jobs in May. Economists had expected a decrease of about 365,000 jobs compared to the loss of 345,000 jobs originally reported for the previous month.
Widespread job losses contributed to the continued decrease in employment, with the manufacturing, professional and business services, and construction industries showing some of the steepest declines.
With the bigger than expected drop in employment, Chris Low, chief economist for FTN Financial said, The trend toward recovery suffered a setback today, although he noted that the huge job losses of the first quarter are well behind us.
We continue to expect positive economic growth in the third quarter, Low added.
Employment in the manufacturing industry fell by 136,000 jobs, while employment in the construction industry fell by 79,000 jobs, resulting in a total decrease of 223,000 jobs in the goods-producing sector.
The professional and business services industry lost 118,000 jobs, while the government shed 52,000 jobs. More modest decreases in retail and leisure and hospitality jobs also contributed to a decrease of 244,000 jobs in the service-providing sector.
Meanwhile, education and health services was the only industry to add jobs, with employment increasing by 34,000 jobs.
With the bigger than expected decrease in employment, the unemployment rate edged up to 9.5 percent in June from 9.4 percent in May.
The increase lifted the unemployment rate to its highest level since a matching rate in August of 1983, although it was below economist estimates of 9.6 percent. The unemployment rate has not been higher since it was at 10.1 percent in June of 1983.
A separate report from the Labor Department showed that initial jobless claims in the week ended June 27th fell by slightly more than economists had been expecting.
The report showed that initial claims fell to 614,000 from the previous week's revised figure of 630,000. Economists had been expecting claims to fall to 615,000 from the 627,000 originally reported for the previous week.
Additionally, the less volatile four-week moving average edged down to 615,250 from the previous week's revised average of 618,000.
The Labor Department also said that continuing claims in the week ended June 20th fell to 6.702 million from the preceding week's revised level of 6.755 million.
While the drop in continuing claims is generally seen as a positive sign, Peter Boockvar, equity strategist at Miller Tabak, noted, There has been a big discussion of late over the expiration of unemployment insurance and how the recent drop in Continuing Claims is due to people losing it rather than finding a new job.
Meanwhile, the monthly employment report showed that employees' average hourly earnings were unchanged in June at $18.53.
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