U.S. jobless rate jumps to four-year-high 5.7%

WASHINGTON (MarketWatch) -- Nonfarm payrolls fell for the seventh straight month in July while the nation's unemployment jumped to 5.7%, a four-year high, the Labor Department reported Friday

Nonfarm payrolls fell by 51,000 last month, led by losses in manufacturing, construction, retail and temporary help. Read the full report.
Since December, 463,000 jobs have been lost, the strongest signal yet that the economy is in a recession.
"This is a truly recessionary employment report," wrote Harm Bandholz, an economist for UniCredit Markets. "The details are rather ugly."
The unemployment rate has risen 0.7% in the past three months, matching the fastest increases in the past 26 years.
Total hours worked in the economy fell by 0.4 of a percentage point in July and are down 0.7% in the past year. The average workweek fell to 33.6 hours, matching the all-time low.
Economists surveyed by MarketWatch had been looking for payrolls to shrink by 70,000 and for the unemployment rate to rise to 5.6% from 5.5% in June. See Economic Calendar.
Payrolls in May and June were revised higher by 26,000.
Average hourly earnings rose as expected, adding 6 cents, or 0.3%, to $18.06. Average pay is up 3.4% in the past year, far less than the 5% rise in consumer prices.
"The pickup in unemployment reduces employee bargaining power, suggesting slower wage growth in the near term," wrote Michelle Meyer, an economist for Lehman Bros. "This should relieve some of the inflation pressure but also hinder consumers."
The number of part-time workers who sought full-time employment surged by 5.5% in July to 5.6 million.
The dismal news from the labor front likely won't have much impact on policymakers at the Federal Reserve, which seems determined to stand pat on interest rates at next week's meeting.
The Federal Open Market Committee meets on Tuesday. Analysts are unanimous in their view that the FOMC will not change its 2% target for overnight funds.
The Fed's trying to balance the risks of continued economic weakness against the risk that inflation could accelerate too far. Most analysts expect the Fed to keep rates unchanged through the end of the year.
A small but vocal minority on the FOMC wants to raise interest rates soon to counter inflationary pressures. A key member of that group, Philadelphia Fed President Charles Plosser said recently that the FOMC should begin to tighten down on rates even if the unemployment rate is still rising.
The weak jobs report sparked more talk about a second stimulus package from Congress.
"More must be done to prime the economy's pump and put America back to work," said Christine Owens, director of the National Employment Law Project.
"Our economy continues to work its way through current challenges," said Labor Secretary Elaine Chao. "The resiliency of the economy given all the shocks we have sustained is noteworthy."
The loss of 666,000 private-sector jobs since November "removes any reasonable objection to a second economic stimulus package," said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.

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