Business News
US unemployment climbs to 9.8 per cent in major blow (2nd Roundup)
By Chris Cermak Dec 3, 2010, 19:41 GMT
Washington - The US unemployment rate climbed to 9.8 per cent in November, the Labour Department reported Friday, sharply denting hopes that the labour market was beginning to recover after months of stagnation.
The jobless rate is the highest since April. The department said just 39,000 jobs were added during the month, compared to a revised 172,000 jobs added in October. The jobless rate had remained at 9.6 per cent over the last three months.
The move deeply disappointed analysts after some positive weekly data suggested an improvement was in the offing, and is likely to reignite fears of a 'jobless recovery' taking hold. Economists had expected 150,000 jobs would be added and the jobless rate would hold at 9.6 per cent, according to a Bloomberg News survey.
'No question the report is disappointing,' said US Vice President Joe Biden, but said the administration had made progress over the past months in halting the labour market slide.
More than 15 million Americans were still out of work in November, despite the economy growing 2.5 per cent in the third quarter. Retailers and manufacturers cut jobs, while the health care sector continued to add payroll, the Labour Department said.
But US stocks fell only modestly during trading Friday, as investors seemed to hedge their bets based on some more positive readings from private groups. ADP Employer Services, another closely watched gauge, on Wednesday said 93,000 jobs were added in November.
Still, retailers in particular will be looking on uneasily and hoping the report will not scare consumers away from critical holiday shopping in December.
Kathy Bostjancic, director for Macroeconomic Analysis of the New York-based Conference Board, suggested retailers may have held their own hiring low after high discounts to lure people back into the shops cut profits.
The weak November report 'shows we've returned to anaemic employment growth after October's bump,' Bostjancic said in a statement. 'We don't see any signs that this holiday season will jump-start 2011 employment.'
The rising unemployment is also a major blow to US President Barack Obama, who has said in recent weeks that the recovery in the world's largest economy was beginning to gather steam.
Austin Goolsbee, chair of the White House Council of Economic Advisers, pointed out that 50,000 private-sector jobs were added in November, the 11th straight month that companies have hired.
'Although the overall trajectory of the economy has improved dramatically over the past year, there will surely continue to be bumps in the road ahead such as this,' Goolsbee said.
Republicans are likely to use the poor labour report to push harder for an extension of all tax cuts adopted under former president George W Bush as a means of keeping the economy going.
The tax cuts are due to expire at the end of this year. Obama and his fellow Democrats have pushed for an extension of middle-class tax cuts but sharply resisted extending the cuts for wealthy income earners.
The poor jobs report will also give ammunition to Democrats who have been pushing for an extension of unemployment benefits for millions of out-of-work Americans.
The report is also likely to offer further justification for the US Federal Reserve's controversial move to buy up 600 billion dollars in Treasury securities over the coming months.
The central bank's move was sharply criticized by some foreign governments for pushing down the value of the dollar, but Fed Chairman Ben Bernanke has insisted the move is necessary, as the recovery remains weaker than hoped.
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