The labour market is defying history.
A dismal June employment report shows that employers are adding away as many jobs as they normally it long after a recession is over.
Unemployment rose for three months straight and is now to 9.2%. It is unprecedented in the data dating back to 1948, such a high rate two years in what economists say is a recovery.
The economy added just 18,000 jobs in June. It is a fraction of the 90,000 jobs economists expected and a brightness of 300 000 jobs needed each month to reduce unemployment significantly.
The extraordinarily slow growth is confounding economists, spooking consumers and appalling of job-seekers. Report Friday forced analysts to review their hypothesis that the economy will strengthen in the second half of 2011.
They expected improvement in June, after a dark may jobs report. They found that hiring in May had been artificially weakened by temporary factors _ an increase in the price of gasoline at $4 a gallon and manufactures disturbances caused by the earthquake of the Japan and the nuclear crisis.
But the June numbers were worse than may, even if prices of gasoline is falling and the mills of the new fact.
"This is a remarkable, transverse backslide,"Economist Heidi Shierholz at the Institute of economic policy.""
Sometimes disappointing economic reports no longer seems on closer. It gets uglier.
Hourly workers fell in June. They worked fewer hours. 16.2% Of those who wanted to work were either unemployed, forced to settle for part-time jobs or had given up looking for work. This figure increased by 15.8% in May.
The frustrated is Cree Cohen, who was laid off in April for a job as a contractor for Cisco Systems in Raleigh, N.C. He sought work since then, vain comb job offers, join the friends and set up a Web site with a curriculum vitae and a blog.
"In the past, when I left the job or been laid off, I contacted just of connections I had, and leads to opportunities," said Cohen, who has a wife and a 9-year-old son. "" "". Now, it just seems much more dry.... There are just always this feeling anxious, that nausea. »
A problem is that after slashing jobs during the great recession, employers are still reluctant to replace them. They have learned to squeeze more work and staffs reduced income. Productivity and corporate profits have soared. But companies do not want to add workers until they are convinced that consumers will spend enough to support sales.
Other factors are preventing hiring, too. More advanced software allows managers examine the changes in their business minute by minute. They can delay hiring until they are certain that they need more workers.
Employers have good reasons to wait, said economist Ken Mayland of ClearView Economics. A political stalemate over the federal debt limit threatens to send the Government of the United States default next month. That would send to the increase in interest rates and could tip the economy into recession.
Even if the Barack Obama President and Republican Congress agreed to raise the debt limit, the transaction will probably need deep reductions in government spending and possibly tax increases. Combined, these steps could slow the economy again.
The economy has already lost 493.000 jobs in the Government since the end of the recession, most of them removed by the counties and the cities of cash-short. Now he is liable to large cuts by the Federal Government, too.
Heightening uncertainty is the debt crisis in Europe and the possibility that the China's efforts to tame inflation will slow its booming economy. These two factors could destabilize financial markets and reduce us exports, one of the forces little economy.
"Why an employer would hire now?". Mayland, said. "It is hunker down and wait and see."
The Federal Reserve has already reduced interest rates in the short term to near zero. And last month, has completed a program for the purchase of Treasury bills aimed at strengthening the economy.
Congress, pointing to budget deficits, taking account of spending taxpayers ' money to bring the economy with the new government programs.
"We have painted ourselves into a corner," said Mayland. "When you're at a rate of zero interest and a running $ 1.5 trillion deficit, you don't really have many political options.".
Many analysts say that primarily, the economy needs time to recover from an implosion of the housing market and a devastating financial crisis.
Normally, housing and construction supply recovery. Lower interest rates would attract buyers in the market. The increased demand would encourage builders to hire construction workers packed new houses.
Not so this time. Real estate prices are continuing to fall as banks dump homes entered the market. The people have decreased.
The tepid recovery takes a toll on consumers, whose spending 70% of economic activity accounts. Last week, the Conference Board business group reported that its consumer confidence index fell to 58.5 in June. A healthy reading is 90. At this point, after three previous recessions, the index average of 87.
Low reading suggests consumers are wary about spending. That could leave even more prudent companies for hiring.
Businesses are nervous about the Economic Outlook, now that the Fed and Congress seem to have ended their efforts to stimulate growth, says David Rosenberg, Chief Economist at Gluskin Sheff + Associates.
"The Cabinet of the policy is quite simple, and we can see what looks like the Emperor stripped," Rosenberg said. "It is not a pretty picture."
___
AP Business Writers Christopher s. Rugaber and Derek Kravitz in Washington contributed to this report.
No comments:
Post a Comment