US unemployment continues to rise

Percentage of workforce that is unemployed rises to highest level in 26 years.

    Analysts expect the number of unemployed
    people in the US to rise further [AFP]

    "Our sense is job losses may continue for a couple of more months, which can only act to impede a consumer-led recovery."

    Analysts had predicted that 230,000 jobs would be lost in August, pushing the unemployment rate to 9.5 per cent for that month.

    Recovery dampened

    Mark Vitner at Wells Fargo Securities said that it could take some time before the rate of US unemployment begins to decline.

    "We are seeing a little bit of improvement in the rate of jobs lost but 216,000 is still a significant loss," he said.

    "If you extend the trend, you would think it would turn positive in the next six months."

    The civilian labour force increased by 73,000 people in August, the labour department data showed, suggesting that more people are looking for employment amid a sense that the economy is beginning to turn the corner.

    The US economy contracted by a one per cent annual rate in the second quarter of the year, compared to a 6.4 per cent pace of decline in the previous quarter.

    While many economists predict that the US economy will begin to grow in the third quarter of 2009, they say that the labour market will still remain in poor health for some time, stifling the pace of an eventual recovery.

    "As consumer and business confidence improves, more workers will start looking for jobs again and more new entrants will step into the fray," Sophia Koropeckyj, an analyst at Moody's Economy.com, said.

    "This will drive the unemployment rate higher; it is expected to peak above 10 per cent in mid-2010."

    SOURCE: Agencies


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