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The higher unemployment rate of 5.9 percent has analysts predicting a longer economic recovery.
©Los Angeles Times
July 6, 2002
WASHINGTON -- The U.S. unemployment rate rose to 5.9 percent in June and employers hired fewer than half the new workers they had been expected to, the Labor Department said Friday. The figures show the economy recovering at a maddeningly slow pace.
Department officials said U.S. companies added only 36,000 workers last month, compared to the 75,000 that had been predicted. And the officials revised away previous months' job gains dating back to February, when it was originally thought the labor market had begun staging a comeback. The department initially said employers added 66,000 that month; it now says they trimmed 165,000.
"These are not very promising figures," said Richard Yamarone, chief economist with New York-based Argus Research Corp. "Employment growth is the single most important statistic for this recovery because new jobs translate into more income and more spending.
"But," said Yamarone, "these number make you think there isn't going to be much of either."
There were a few bright spots in the new report. The length of the average workweek rose slightly; that's usually a prelude to new hiring. Wages also rose; average hourly earnings for production and nonsupervisory workers, who account for about 80 percent of the nation's labor force, went up 6 cents in June to $14.76.
For a few analysts, that was enough. "The worst of the massive layoffs are behind us," declared Stan Shipley, a senior economist with Merrill Lynch & Co. in New York. "You're going to see payroll job growth coming back strongly" in the fall.
U.S. stocks staged a powerful rally Friday with the Dow Jones industrial average posting its biggest gain in nine months.
But most analysts said the new jobs report played no role in the run-up, and warned that with firms like troubled WorldCom Inc. and Electronic Data Systems Inc. announcing big new job cuts this week and most industries reporting little or no payroll expansion, prospects for a quick and strong recovery appear to be dimming.
"All these things argue for the coming decade being sub-1990s," said Peter E. Kretzmer, a senior economist with Bank of America Corp. in New York.
June's 5.9 percent jobless rate was only fractionally above the previous month's 5.8 percent rate, but was substantially above last June's 4.6 percent rate. Some 8.4-million Americans were unemployed during the month, almost 1-million more than a year ago.
The unemployment rate among Latinos rose four tenths of a percentage point from 7 percent in May to 7.4 last month. That among African-Americans climbed a half point to 10.7 percent, according to the department.
The number of people jobless for six months or more hit an eight-year high of 1.67-million in June. The average length of a stint out of work hit a six-year high of 17.3 weeks.
Regular unemployment compensation runs out at the end of six months. After that, jobless workers must rely on various extension programs that critics say operate in drastically different ways in the various states.
"Six hundred thousand workers will run out of benefits in the next few months because of major gaps in the federal extension program," charged Maurice Emsellem, an official with the National Employment Law Project, an activist group that helps low-income workers obtain coverage.
Emsellem said that of 14 states with unemployment rates above 6 percent, only two -- Washington and Oregon -- will qualify for extra benefits under a federally funded extension program. He said the rest will have to wind down their extension programs. Among them are California and Pennsylvania.
Although up from May, the nation's nonfarm payrolls changed little in recent months, and totalled 130.7-million in June. By contrast, they were falling by an average of 160,000 workers a month from the March 2001 start of the current recession through February.