U.S. Unemployment at Five Year High

In August, the unemployment rate reached 6.1% – its highest level in five years. 605,000 jobs have been cut since 2007. The most troubled fields are manufacturing, construction and customer service. Analysts fear recession in the U.S.

The unemployment rate has hit its highest level in five years in America: 6.1% of the working population against 5.7% in July. On Friday, September 5th, the U.S. Department of Labor said that the state’s economy had suppressed 84,000 jobs for 8 months in a row.

Analysts are facing a double disappointment, all the more so since they expected only 75,000 jobs to be suppressed and a standstill for the unemployment rate, which has thus reached its highest level since September 2003.

The figures for June and July were revised upwards: 60,000 jobs were lost in July and 100,000 in June, instead of an estimated 51,000 jobs for each month.

Usually analysts pay more attention to job creations, which they deem more representative of the condition of the economy. But this leap in the unemployment rate is bad news, confirming a trend that appeared a few months ago. The unemployment rate has increased by 1.1% since April, which should make analysts fear recession once again.

In total, 605,000 jobs in the U.S. have been lost since 2007.

The figures were released a dozen days before the next meeting of the U.S. Federal Reserve Board. They are to revise their leading interest rate, which is currently at 2%.

Analysts expect another status quo due to an expected slowdown in economic activity towards the end of 2008 and after the encouraging figures released over the last few weeks for the second quarter of the year. The Fed itself has just revised down its forecast for economic growth for the end of the year and 2009.

Manufacturing was the sector that suffered most in August – 61,000 jobs were lost because of the difficulties encountered in the automobile sector – difficulties that even reached car dealers. All of this is partly responsible for the numerous layoffs in the retailing sector (20,000), the Department of Labor said.

The construction and customer service sectors respectively lost 8,000 and 53,000 jobs. The latter includes temporary work agencies. On the other hand, 55,000 jobs were created in the health/education sector. The civil service also created 17,000 jobs.

The Department mentioned that even though the high unemployment rate in the beginning of the summer was due to 16 to 24-year-old people that arrived on the labor market, “August’s increase only concerns workers aged 25 or more.”

The average wage increased by 0.4%, to $18.14 in August, which was more than the forecast of a 0.3%. It has been a 3.6% raise over the last 12 months. This figure came in at 3.4% in August.

The average workweek has remained steady: 33.7 hours. But as far as the industry is concerned, it has decreased: 40.9 hours in August against 41 in July.