US job cuts at highest since 2003

Figures from the Labor Department show that US employers axed 159,000 jobs last month, this represents the highest since March 2003.

The figure is double the fall from the previous month and marks the ninth consecutive month that the economy has lost jobs.

Furthermore, the Labor Department said that the unemployment rate is steady at 6.1% of the workforce.

William Sullivan, economist at JVB Financial in Florida, explains that credit market stresses are beginning to impact the labor markets and believes there may be even weaker job figures later this year or into next year.

According to the Labor Department, revised figures show that employers axed 73,000 jobs in August, slightly fewer than the 84,000 originally forecast.

However, job losses in July turned out to be slightly worse at 67,000, against the 60,000 previously announced.

51,000 posts were lost in manufacturing while construction companies shed 35,000 jobs; 40,000 jobs were lost in retailing while business services shed 27,000 posts and financial services cut 17,000 jobs; the leisure and hospitality sector also saw 17,000 posts go.

Following the figures, it is expected that the US central bank, the Federal Reserve, will reduce its key interest rate later this month, taking it to just 1.5%. The Fed made dramatic cuts in late 2007 and early 2008.

Discuss this in the Finance Markets forums

Story link: US job cuts at highest since 2003