US job loss data worse than expected

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The Independent Online

The US suffered more than double the forecast number of job losses last month, sparking fresh fears of a lethargic recovery in the world's biggest economy.

The US non-farm payroll data for July had been expected to be lower by 65,000, but it actually plummeted by 131,000.

While a key factor was the loss of 143,000 temporary workers who had been employed to carry out the decennial US census, the private sector also created a less-than-expected 71,000 jobs last month. The US unemployment rate remained unchanged at 9.5 per cent.

The data reinforced fears of a "jobless recovery" in the US economy, which is struggling to replace the 8.4 million jobs that were lost during the recession.

Scott Buchta, the head of investment strategy at Braver Stern Securities, said: "I think that this report shows that the economic rebound will continue to be sluggish, as companies have little incentive to expand their workforces, in light of the uncertainties that exist."

A string of weak data recently has fuelled speculation that the US central bank could restart quantitative easing at its rate-setting meeting next week to pump money into the economy. The dollar yesterday headed towards a 15-year low against the yen, while yields on US bonds hit fresh record lows. "It's just not safe to hold dollars. Quantitative easing is back on the table and it will push yields even lower," said Douglas Borthwick, the head trader at Faros Trading.

Economic growth in the US slowed to an annualised rate of 2.4 per cent in the second quarter, from 3.7 per cent in the first three months of the year.

The news on job losses in different parts of the economy was mixed. State and local government shed 202,000 workers in July, following a drop of 252,000 in June. There was also a fall of 5,600 on the payroll of temporary help services staff.

Furthermore, the service sector added only 38,000 jobs after growing by 34,000 jobs in June. However, the goods-producing and manufacturing sectors increased employment levels.

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