News about the world: US jobless hits seven-month high

Saturday, December 4, 2010

US jobless hits seven-month high

A jobs sign is seen on the front of the US Chamber of Commerce building

High unemployment is undermining economic recovery, analysts say

The US unemployment rate rose to 9.8% in November, the highest rate since April, the US Labor Department has said, raising fears about the strength of the country's economic recovery.

Just 39,000 jobs were created last month, below analysts' expectations. In October, 172,000 jobs were created.

European stocks markets fell sharply after the figures were published.

Analysts are concerned that the levels of high unemployment in the US are undermining the economy's recovery.

The UK's FTSE 100, France' Cac 40 and Germany's Dax share indexes all moved sharply into negative territory when the unemployment data were released.

The jobs number is a first estimate, and could be revised in the coming months.

The Labor Department said 15.1 million people were now unemployed in the US, equating to a rate of 9.8%. This is an increase from the 9.6% rate recorded in the previous three months.

Jobs were created in the business services, healthcare and mining sectors, but job numbers in the retail and manufacturing sectors fell.

Analysts were distinctly underwhelmed by the jobs figures.

"Obviously it's a surprise - it's very disappointing," said Bernard Baumohl at the Economic Outlook Group.

"Clearly this is not what was expected. We were looking for something much, much higher."

However, he said the number of new jobs would probably be revised "substantially up" next month, in line with recent job figures.

At the beginning of last month, the US Federal Reserve, spurred by weak economic growth, announced a stimulus programme to pump $600bn (£382bn) into the economy.

High unemployment and a weak housing market in particular are hampering growth, analysts say.

This is the second major stimulus package the Fed has introduced to try to kick-start the recovery, having pumped $1.75tn into the economy during the downturn.

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