Unemployment increases to 5.7 percent in November
AP Economics WriterWASHINGTON (AP) -- The nation's unemployment rate took another big leap upward in November to 5.7 percent, the highest level in six years, as 331,000 more Americans lost their jobs, the government reported Friday.
It marked the second consecutive month of massive job losses as the weak economy continued to stagger from the blow delivered by the Sept. 11 terrorist attacks.
The government said that since March, when the nation's first recession in a decade began, 1.2 million Americans have lost their jobs.
Economists fear that thousands more will be thrown out of work even if the country is able to mount a sustainable recovery in the first half of next year. Many forecasters believe the jobless rate will peak at around 6.5 percent next summer. That would still be better than the 7.8 percent unemployment level hit during the last recession in 1990-91.
Analysts said Friday's jobless report represented a dash of cold water over hopes that had been building in financial markets that the recovery had already bottomed out and a rebound was under way.
"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 of Chicago.
The 5.7 percent jobless rate last month, the highest level since August 1995, followed an increase that had pushed the rate to 5.4 percent in October, the first month that layoffs from the terrorist attacks began to show up in the government statistics.
The 331,000 payroll jobs lost last month came on the heels of a loss of drop of 468,000 jobs in October, the biggest one-month loss in 21 years.
While economists still project that the current recession will be over by March, making it about average in length, they are concerned that this forecast could prove too optimistic if the rising layoffs trigger a marked cutback in consumer spending.
Major retailers reported Thursday that the all-important holiday sales season had gotten off to a lackluster start in November.
The Federal Reserve, which has already cut interest rates 10 times this year in an effort to spur demand for interest-sensitive items such as houses and cars, is expected to cut rates for an 11th time when Fed policy-makers meet Tuesday for their final time this year.
The administration has continued to urge Congress to pass an economic stimulus bill weighted toward tax relief for individuals and corporations, but Democrats have delayed the measure, insisting that more help be included for low-income Americans and people who have lost their jobs.
For November, the government reported that the drop of 331,000 payroll jobs reflected continued heavy losses in manufacturing, which has borne the brunt of this recession.
Factory employment fell by 163,000 last month, bringing the total number of manufacturing jobs lost since July 2000 to 1.2 million. Large cutbacks were made in electrical equipment and industrial machinery, two industries that have accounted for one-third of all jobs lost in manufacturing since the slowdown began.
The services industry, where most Americans work, lost 70,000 jobs in November and over the last 12 months has seen employment shrink by 221,000 jobs. In November, employment at hotels fell by 7,000, following an even bigger drop in October, and 25,000 jobs were lost in the amusement and recreation sector. The travel industry has been particularly hard-hit by the terrorist attacks.
However, one sector which has seen a boom in employment in the last two months is guard services, which added 15,000 jobs in November after gaining 14,000 jobs in October.
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Labor's Bureau of Labor Statistics: http://www.bls.gov