US job losses hit nine-year high

The US unemployment rate in June unexpectedly climbed to a nine-year high as the world's largest economy shed 30,000 jobs last month, official figures showed today.

In a bleaker report than anticipated, the labour department said that the jobless rate rose to 6.4% last month from May's 6.1%. Most economists had expected June's jobless rate to be 6.2%.

Job losses in May were much higher than previously reported as the labour department sharply revised that month's numbers to 70,000 from an original 17,000. The battered manufacturing sector lost 56,000 jobs, and information industries shed 10,000 workers.

The figures will make gloomy reading for the White House as some administration officials thought June would see an increase in payrolls, the first since January. But today's bleak report dashed hopes of the beginnings of a rebound in the jobs market.

Because growth has been lacklustre since the US emerged from recession in 2001, the economy has failed to create jobs. On the contrary, under the so-called jobless recovery, more than two million jobs have disappeared since the president, George Bush, took office in January 2001.

In fact, Mr Bush could be the first president since Herbert Hoover, who was in the White House from 1929 to 1933, the years of the Great Depression, to oversee a decline in total US jobs during his term. By contrast, 22 million jobs were created during the Clinton years.

The persistence of sluggishness has surprised economists, and some believe that the job market will not have recovered by the end of 2004, when Mr Bush will have to fight for re-election. With the presidential elections looming next year, Democrats have focused on the economy as Mr Bush's weak spot.

Nancy Pelosi of California, the House Democratic leader, has described Mr. Bush's economic record as "$3-trillion deeper in debt, three million fewer jobs."

A growth rate of at least 3% is needed to encourage hiring, say economists, but such growth has not occurred in consecutive quarters since the final six months of 1999. The economy grew only at a 1.4% annual rate in the first quarter.

In an attempt to boost growth, the Federal Reserve last week cut short-term interest rates to 1%, their lowest level in 45 years. The US central bank said at the time that the economy was still weak despite previous cuts in interest rates.

"The economy has yet to exhibit sustainable growth. With inflationary expectations subdued, the committee judged that a slightly more expansive monetary policy would add further support to an economy which it expects to improve over time," the Fed said last week.

Private economists agreed that growth should pick up later this year. The economy may expand at a 3.5% annual rate during the current quarter and at 3.7% in the final three months of the year, according to a Bloomberg survey.