US jobless rate up

The US unemployment rate rose to 5.9 percent in June as companies hired half the number of workers expected, evidence the economic rebound has been slow to create jobs.

"Employers are very reluctant to add back the workers they let go," said David Wyss, chief economist at Standard & Poor's in New York. "We're just going to see a very slow recovery in employment."

Job creation matters because consumers account for two-thirds of the economy, and if spending slows, the recovery will falter.

WorldCom Inc said it would eliminate 17,000 jobs and Electronic Data Systems Corp will cut 2,000 positions, which may help push up the unemployment rate.

Unemployment rose from 5.8 percent in May, and payrolls increased by 36,000. The number of people unemployed for at least half a year rose to the highest in eight years, the Labor Department said, and factory jobs declined for a 23rd month. Retail employment fell for the second straight month.

The number of unemployed totals 8.4 million, compared with 6.5 million a year earlier, when the recession was three months old. The number of people who said they were unemployed for 27 weeks or longer rose to 1.67 million, the highest since May 1994.

Monthly revisions have wiped out reports of job gains that started in February. For that month, the Labor Department first reported that 66,000 jobs had been created, which at the time was the first gain since July 2001. February now shows a job loss of 165,000.

Initial reports of job additions in March and April also have been revised into losses. Now, May is the first month with gains in this recovery, and so far this year three times as many workers have been fired than hired.

"Companies sometimes report late so they don't get included in the first numbers," said John Castle, an economist with the Current Employment Statistics Program of the Bureau of Labor Statistics. The survey is a joint national and state program and the states will make follow-up phone calls if the responses are running low. "Nothing has occurred in the last few months that has been abnormal" in terms of the number of responses received, Castle said.

"We are still in a very anemic recovery," said Carl Camden, president and chief operating officer of Kelly Services Inc, a staffing services company. "We have not yet seen the type of strong burst of demand for our services that has often been typical of past recoveries."

The government's monthly job growth figures are based on statistics provided by businesses. The unemployment rate is based on a survey of US households. Factories shed 23,000 jobs, more than twice the number expected. Many manufacturers are boosting production by asking existing workers to put in longer hours. Manufacturing overtime rose to 4.3 hours in June from 4.2 hours in May.

Service-producing employers, which include retailers, transportation companies and government agencies, added 46,000 jobs after creating 60,000 a month before. The June pace was the slowest since February.

Retailers eliminated 18,000 jobs in June after shedding 22,000 a month earlier. Auto dealerships were among those to cut jobs.

Employment at construction companies rose by 14,000 after dropping by 3,000, as home buying helps keep the recovery intact.

Likewise, mortgage brokerages added jobs, contributing to an increase in employment at financial services firms.