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Crucial time for Andhra techies in US
America (Washington): Job losses continued to afflict the world's
biggest economy in June as US employers shed 62,000 non-farm jobs
amid a lingering slowdown, according to a Labour Department report.
The unemployment rate held steady last month at 5.5 per cent.
The volume of job losses was slightly worse than the markets had
expected, as most economists had predicted that 60,000 posts were
cut in June.
"Unemployment is still on a rising trend, payrolls are falling and
there's no light at the end of the tunnel here, so the tax rebates
may have pushed up consumer spending, but it doesn't seem to have
improved the labour market yet,” said Ian Morris, chief US economist
at HSBC North America.
The US economy has lost jobs every month of this year so far, and
June's job cuts followed a loss of a revised 62,000 positions in
May. The government had originally said that 49,000 jobs had been
cut in May.
Morris said the "continued rate of deterioration" in the job market
could see the unemployment rate peak above six per cent in the
coming months. Economists say America's economy needs to create
about 100,000 jobs every month to keep up with new labour market
entrants.
Analysts said the weak job reading is likely to pressure the Federal
Reserve to keep interest rates on hold at 2.0 per cent despite
inflation concerns.
"We expect the Federal Reserve to remain on hold on the basis of
weak employment among other factors. Markets are pricing in hikes
after this summer," said Stephen Gallagher, an economist at Societe
Generale.
The central bank had slashed its key base rate aggressively since
September in a bid to fire up economic growth, but put its
rate-cutting campaign on hold last month in the face of mounting
inflation fears.
US growth registered a lacklustre one per cent during the first
quarter, blamed on a lingering housing market slump, a credit
squeeze and rocketing oil prices which hit a record high of above
146 dollars a barrel on Thursday.
Last month’s job losses were particularly heavy in the
goods-producing, construction, manufacturing and service sectors. A
total of 43,000 positions were lost in the construction industry
which has been hit hard by the housing downturn.
Manufacturing, especially the auto sector, has been impacted by the
economic slowdown and as Americans have tightened their belts.
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