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Friday, 7 December, 2001, 22:17 GMT
US jobless at six-year high
US factory
The manufacturing sector has seen big job losses again
Another big jump in the number of unemployed in the United States has lowered hopes that the economy is heading for a quick recovery.

The latest figures showed the unemployment rate jumped to 5.7% in November from 5.4% the previous month, with 331,000 non-farm jobs being shed.


We had a little bit of false euphoria .... this report brings us back to reality

Carl Tannenbaum
ABN Amro
Analysts say the worse than expected figures mean that the US Federal Reserve is now likely to cut interest rates yet again when it meets next week.

The Fed has already cut rates 10 times this year to 2% as it tries to revive the US economy.

"We were set up for strength but we got weakness. The details are not pretty," said economist Christopher Low of First Tennessee Capital Markets.

"I think this is going to make the market think about leaning toward a (half-percentage) point cut. It definitely takes no cut off the table," he said.

Manufacturing suffers

The unemployment rate of 5.7% is the highest jobless rate since August 1995.

There were more heavy job losses in the manufacturing sector, with 163,000 being shed in November.

The slowdown in manufacturing has hit states such as North Carolina particularly hard.

"This recession has actually been worse than the 1990 recession for North Carolina," Mark Vitner from Wachovia Securities in North Carolina told the BBC's World Business Report programme.

"The 1990 recession really didn't impact manufacturing all that much, but this one has, and manufacturing is so important in North Carolina we've really seen a dramatic deterioration in economic activity."

"Not only has it been in the old line industries but some of the new line industries that have moved to the state have been adversely impacted.

"About 60% of the world's fibre optic cable is made in North Carolina and that industry is really back on its heels right now."

Dow falls

On Wall Street, shares fell back following the disappointing news and by the close of trade the leading Dow index had fallen 49.68 points to 10,049.46.

The index has climbed steadily higher over the past couple of weeks on hopes that the US economy is beginning to rebound.

"We had a little bit of false euphoria over the past 10 days. This report brings us back to reality," said Carl Tannenbaum, chief economist at ABN Amro in Chicago.

Consumer confidence rises

Despite the high levels of unemployment, new figures have suggested the US consumer is still managing to ignore the current economic gloom.

The University of Michigan's consumer sentiment index rose for the third month in a row - climbing to 85.8 in early December from 83.9 in November.

The index is a closely watched barometer of consumer behaviour, and the better than expected figure will raise hopes that consumers will be hitting the stores during the crucial Christmas shopping period.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Sumant Bhatia
reports from a Californian shopping mall on the response of consumers to fears of recession
The BBC's Roger White
speaks to Tom Witt of the Bureau of Business and Economic Research in W. Virginia, and Mark Vitner, Wachovia Securities

Terror's impact

Signs of a slowdown

Rate cuts

Analysis

Key players

FULL SPECIAL REPORT
See also:

26 Nov 01 | Business
US officially enters recession
02 Nov 01 | Business
US unemployment rockets
31 Oct 01 | Business
US economy shrinks
26 Sep 01 | Business
IMF warns on global economy
01 Nov 01 | Business
Job losses to hit 24 million
31 Oct 01 | Business
French jobless rate still rising
17 Oct 01 | Business
UK unemployment expected to rise
09 Oct 01 | Business
German unemployment rises
03 Aug 01 | Business
US unemployment remains steady
02 Nov 01 | Business
How the job market changed
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