US unemployment rate rises to 9.8%

Amplify’d from www.ft.com

US unemployment rate rises to 9.8%

The US economy added a worse-than-expected 39,000 jobs in November, as the unemployment rate edged higher, underscoring the weakness of a labour market recovery that is struggling to gain traction.

The rise in payrolls was far weaker than the 150,000 increase that Wall Street analysts were predicting and the unemployment rate rose from 9.6 to 9.8 per cent, the Bureau of Labor Statistics said on Friday. November marked the 19th month in a row that the jobless rate remained greater than 9 per cent.

The disappointing figures will raise questions about whether the US economy is facing a double-dip recession and will support the Federal Reserve’s move to engage in additional quantitative easing.

“Any thought that the Fed would scale back its QE2 purchases of Treasuries in the coming months has to be dashed by this report,” said John Ryding and Conrad DeQuadros, economists at RDQ Economics.

“Today’s numbers underscore the importance of extending expiring tax cuts for the middle class and unemployment insurance for those Americans who have lost their jobs,” said Austan Goolsbee, head of the White House’s Council of Economic Advisers. “Failure to do this would jeopardise hundreds of thousands of additional jobs, and leave millions of Americans, who are out of work through no fault of their own, on their own.”

Investors were disappointed and sold off the riskier assets which had rallied in the last couple of days when stronger housing and manufacturing data had raised hopes for an improved payroll figure.

There had been some signs of renewed health in the jobs market recently. On Wednesday, ADP, the payroll processing company, reported solid private sector hiring, and on Thursday the four-week moving average for jobless claims fell to 431,000.

“there are obviously very severe economic and social consequences from this level of unemployment” while expressing concern that the economy was not growing fast enough to “materially” reduce the jobless rate. Long-term unemployment leads to erosion of skills, making it less likely that workers will find jobs.

Read more at www.ft.com

 

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