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EDITIONS
Friday, 6 December, 2002, 21:34 GMT
US jobless rate jumps to 6%
factory workers
US companies surprised experts by cutting more jobs
The US unemployment rate has made a surprisingly large jump, raising question over the strength of the US economic recovery.


This is telling you we have a weakening labour market

Asha Bangalore,
economist
Last month, the unemployment rate rose to 6% from October's 5.7%, the Labor Department reported on Friday.

Economists polled prior to the report's release had predicted the rate would rise to just 5.8%.

The figures were released before the surprise resignations of US Treasury Secretary Paul O'Neill and White House economic adviser Lawrence Lindsey.

Analysts say the weakness in the US economy is behind the White House shake-up, as advisers to President Bush are worried that it could hit the president's chances of re-election in 2004.

'Weak report'

The latest figures showed that businesses shed 40,000 jobs last month, the largest number since February, and in stark contrast to the 38,000 gain analysts expected.

Economists say it is a worrying sign for the economy, giving further evidence that companies remain reluctant to invest in their businesses.

"It's a very weak report," said Asha Bangalore, economist at Northern Trust Co in Chicago.

"This is telling you we have a weakening labour market, but at the same time yesterday's jobless claims did drop, so the labour market situation remains unclear," he said.

On Thursday, the Labor Department reported weekly initial claims for unemployment benefits fell 13,000 for the week ending 30 November, the third consecutive weekly drop.

Manufacturing suffers

Friday's reported rise in the monthly unemployment rate raises the number of unemployed to its highest level since April.

As has been the trend, the service sector continued to add jobs last month, while manufacturers cut 45,000 workers.

Additionally, despite the busy Christmas selling season, retailers sliced 39,000 jobs in November in anticipation of soft holiday sales.

More positively, the government revised figures for September and October, indicating fewer job cuts in September and reversing October's drop of 5,000 workers to a gain of 6,000.

On Wall Street, the Dow dropped by more than 100 points in early trade following the gloomy unemployment figures.

But share prices recovered as investors digested news of the resignations, and hoped that the shake-up would help the economy.

By the close of trade, the Dow Jones index was up 22.49 points, or 0.26%, at 8,645.77.

 WATCH/LISTEN
 ON THIS STORY
Ian Shepherdson, economist
"I think the first half of next year could be quite strong"
Ian Shepherdson, High Frequency Economics
"Unemployment tends to lag what's going on in the economy."

Economic indicators

Fears and hopes

US Fed decisons

IN DEPTH
See also:

03 Dec 02 | Business
27 Nov 02 | Business
27 Nov 02 | Business
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