August Unemployment Report Offers no Signs of Improvement

Unemployment has hit a five year high, according to a report released by the Labor Dept. Friday. Unemployment surged from 5.7 in July to 6.1 percent in August. Analysts had expected the rate to remain unchanged. The drastic increase gave investors pause as it was a signal of a heightened risk that the economy will continue to worsen.

The economy shed 84,000 jobs in August, up from the predicted 75,000. Over 605,000 jobs have been lost throughout the eight consecutive months of job shed. The Labor Dept. also revealed a much bleaker reality than previously thought by revising unemployment numbers from 51, 000 for July and August to 60,000 jobs lost in July and 100,000 jobs lost in August.

All sectors of the economy are being hit, but the manufacturing industry has felt the biggest blow with 61,000 jobs cut in August alone. Of those, 39,000 were in the auto industry. Other sectors that have experienced significant job losses include construction with 8,000 jobs shed and retail with 20,000 jobs lost. Overall, job losses in the private sector - excluding government jobs - totaled 101,000 in August.

Another ominous sign for the economy is that initial jobless claim filings and jobless benefits have climbed to levels typically associated with a recession.

Unfortunately, this trend is likely to continue for some time.

"We think the unemployment rate will keep growing, probably reach between 6 to 6.5% by mid 2009 and only start declining in the second half of next year," said Gad Levanon, senior economist at The Conference Board, before Friday's job report was released.

Source CNNMoney.com:

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