Payrolls Fall More Than Forecast, Unemployment Rises

Payrolls Fall More Than Forecast, Unemployment Rises
By Shobhana Chandra | Bloomberg

Employers in the U.S. cut 467,000 jobs in June, the unemployment rate rose and hourly earnings stagnated, offering little evidence the Obama administration’s stimulus package is shoring up the labor market.

The payroll decline was more than forecast and followed a 322,000 drop in May, according to Labor Department figures released today in Washington. The jobless rate jumped to 9.5 percent, the highest since August 1983, from 9.4 percent.

Unemployment is projected to keep rising for the rest of the year just as the income boost from the stimulus package fades, undermining prospects for a sustained rebound in household purchases, analysts said. As companies from General Motors Corp. to Kimberly-Clark Corp. cut costs, the lack of jobs will limit any recovery.

“Payrolls will be going down the rest of the year and the unemployment rate will be rising,” John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina, said before the report. “The challenge for the Obama administration is that we’ll have positive economic growth but still no job growth. It’s going to be tough on them.” Read more.