THE UNEMPLOYMENT RATE in the US has risen for the second consecutive month, raising fears that the country’s economic recovery may have stalled as it struggles with high oil prices.
The jobs market added just 54,000 positions last month – far below the average 220,000 of the previous three months. Stocks on Wall Street, which have been falling for three consecutive days, dropped further as the dismal figures were released today.
The figure of 9.1 per cent is still lower than it was during 2010, when unemployment averaged 9.6 per cent, as this chart shows. But the fact that it is rising again after dropping for several consecutive months (see chart) is a concern for economists. It’s thought higher oil prices and sluggish wages, which have not kept pace with inflation, are hitting the consumer spending which powers 70 per cent of the US economy.
“Economic activity has clearly hit a soft patch,” said Steven Wood, chief economist for Insight Economics. “The open question is whether this is temporary and will quickly reverse itself over the next couple of months or whether this is an adjustment to a slower permanent growth rate.”
Nariman Behravesh, chief economist at consultancy firm IHS, called it a “pretty bad report. It’s tempting to say it’s an outlier, but I’m a little worried.”
Meanwhile, the Wall Street Journal reports that almost one-third of the unemployed in the US have been out of work for more than a year. After this time people tend to lose skills and find it more difficult to get back into the job market.
Nevertheless, the US figures still compare favourably to Ireland where unemployment reached a high of 14.8 per cent in May, according to the CSO. The rate has been hovering in the low teens ever since 2009.
- Additional reporting by the AP
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