US unemployment rate eases to 10%

BBC NEWS | 2009/12/04 22:38:38 GMT

The US unemployment rate fell in November to 10% from 10.2% in October, Labor Department figures show. Employers in November cut the lowest number of jobs since the recession began in December 2007. In all, 11,000 jobs went over the month. That was far fewer than the 130,000 expected by most analysts. President Barack Obama said the figures were “good news”, but warned that there were “more bumps in the road to economic recovery”. “There is a lot more to do before we can celebrate… good trends don’t pay the rent,” he said. For an economy the size of the US, the change was so small that the Labor Department described employment as “essentially unchanged”. In further good news for the US economy, factory orders rose by 0.6% in October, Commerce Department figures showed. Analysts had expected orders to remain unchanged. The good data pushed the dollar higher against major currencies.

‘Much-needed progress’

Payrolls have fallen every month for almost two years, but this year, the pace of decline has slowed sharply. Revised figures for October also showed an improving trend. Originally, official estimates said 190,000 jobs were lost, that was revised down to 111,000. The White House spokesman, Robert Gibbs, said the sharp slowdown in job losses showed “much-needed progress”, but added that the Obama administration was still looking at providing help to the labour market. More than 15 million Americans are out of work, twice the number at the start of the      recession. Mr. Gibbs said they were looking at the prospects for using remaining financial bail-out funds to help create employment. Four sectors added jobs in November, the Labor Department figures showed: professional and business services, education and health, temporary help employment and the government itself.

Suffering sectors

Although the unemployment rate has risen for almost two years solid, the rate of increase has been dropping throughout the year. However, there are still some sectors that are seeing substantial job losses. Construction is still suffering, with 27,000 jobs lost over the month. Manufacturing is another area badly hit. It saw payrolls shrink by 41,000 between October and November. There was a mixed reaction to the better-than-expected figures. Some saw it as simply a rogue month. “Today’s US employment report for the month of November was surprisingly good, but we believe it is a blip,” said Jason Schenker, president of Prestige Economics. “The worst is not behind us – at least not for the job market.”

Peter Morici, professor at the Smith School of Business at University of Maryland, said the fall in the unemployment rate was more to do with people leaving the workforce in frustration than people actually finding work. He added that, considering the level of government stimulus, more jobs should have been created. But others, although taken by surprise, thought the figure might signal a turning point. “These numbers are almost too good to be true. Having said that, they are consistent with the weekly decline in initial unemployment claims,” said Tom Sowanick, chief investment officer of the Omnivest Group. “There’s a 193,000 net improvement in jobs for the month. Average weekly hours worked [are] also up which is good for consumption spending. These are eye-popping numbers.”


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