The U.S. unemployment rate shot up to 6.4% from May’s 6.1% (See Jobless Rate Up But Payroll Data Improves ), representing its highest level since April of 1994, the Department of Labor (DoL) announced. Additionally, jobless claims for the week ending June 28 were up another 21,000, to 430,000. Weekly jobless claims have stayed above the 400,000 mark – a point generally viewed as recessionary by analysts – since February.
Those numbers cast a shadow on hopes that have been building in the stock market that the US economy is positioned for a rebound, especially after the Federal Reserve last week slashed the federal funds rate by 0.25% to its lowest level in 45 years (See Fed Slashes Rates to Four Decade Lows) . However the Federal Reserve was apparently no match for payrolls that plummeted by an adjusted 70,000 in May, rather than the originally reported 17,000 drop.
Hardest hit in the month were manufacturing payrolls, which fell 56,000, and information industries, which shed 10,000 jobs. However, there was some good news in the otherwise still gloomy job picture. Construction jobs added 101,000 to their payrolls, the fourth consecutive month that employment data in this sector saw an increase. Additionally, employment in health care and social assistance rose by 35,000 over the month and has increased by 306,000 over the year.
Wall street economists participating in a Reuters poll were off the mark for both forecasts. Monthly unemployment data was anticipated to come in at a much lower 6.2% and weekly numbers were pegged at 410,000. However, according to the DoL the weekly numbers this time of year are influenced by seasonal adjustment factors that have difficulty taking into account the varied end to the school year across the country.
Instead, the DoL points to the four-week moving average for the June 28 week, for a more reliable indicator because it irons out short-term volatility. Those numbers decreased slightly to 425,000 from a revised 429,000 the previous week (See Jobless Claims Keep Dropping – But Not Below 400,000 Mark ).