US employers shed 62,000 jobs in June

WASHINGTON: Job losses continued to afflict the world’s biggest economy in June as US employers shed 62,000 non-farm jobs amid a lingering slowdown, according to a Labour Department report. The unemployment rate held steady last month at 5.5 per cent.

The volume of job losses was slightly worse than the markets had expected, as most economists had predicted that 60,000 posts were cut in June.

“Unemployment is still on a rising trend, payrolls are falling and there’s no light at the end of the tunnel here, so the tax rebates may have pushed up consumer spending, but it doesn’t seem to have improved the labour market yet,” said Ian Morris, chief US economist at HSBC North America.

The US economy has lost jobs every month of this year so far, and June’s job cuts followed a loss of a revised 62,000 positions in May. The government had originally said that 49,000 jobs had been cut in May.

Morris said the “continued rate of deterioration” in the job market could see the unemployment rate peak above six per cent in the coming months. Economists say America’s economy needs to create about 100,000 jobs every month to keep up with new labour market entrants.

Analysts said the weak job reading is likely to pressure the Federal Reserve to keep interest rates on hold at 2.0 per cent despite inflation concerns.

“We expect the Federal Reserve to remain on hold on the basis of weak employment among other factors. Markets are pricing in hikes after this summer,” said Stephen Gallagher, an economist at Societe Generale.

The central bank had slashed its key base rate aggressively since September in a bid to fire up economic growth, but put its rate-cutting campaign on hold last month in the face of mounting inflation fears.

US growth registered a lacklustre one per cent during the first quarter, blamed on a lingering housing market slump, a credit squeeze and rocketing oil prices which hit a record high of above 146 dollars a barrel on Thursday.

Last month’s job losses were particularly heavy in the goods-producing, construction, manufacturing and service sectors. A total of 43,000 positions were lost in the construction industry which has been hit hard by the housing downturn.

Manufacturing, especially the auto sector, has been impacted by the economic slowdown and as Americans have tightened their belts.  (AFP)