- The Washington Times - Saturday, July 6, 2002

ASSOCIATED PRESS
The unemployment rate nudged up to 5.9 percent in June as companies uncertain about the economic recovery and shaken by accounting scandals steered clear of big hiring commitments.
The latest snapshot of the job market, released yesterday by the Labor Department, shows an economy that is mending from last year's recession but at a frustratingly slow pace, economists said.
Job hunters will probably find the going tough in the months ahead. Some economists predict the jobless rate could rise to as high as 6.5 percent by fall.
As other parts of the economy are gaining ground, job-seekers feel the lingering effects of last year's recession.
Companies, whose profits and revenue took a hit during the slump, have been worried about the recovery's staying power. As a result, they have been slow to hire back laid-off workers, and reluctant to step up capital investment, a key ingredient to the recovery's health.
"The economy is treading water, and there are no indications that businesses are ready to step up their hiring," said Mark Zandi, chief economist at Economy.com. "Companies won't be in a mood or a position to hire more aggressively until stock prices move up and employers are confident in the recovery."
Economists are also concerned that the stream of corporate accounting scandals could jolt confidence, making consumers the driving force behind the economy less willing to spend and companies even more wary of making big commitments.
Americans' confidence in the economy, as measured by the Conference Board, fell in June to a four-month low.
In June, job growth wasn't strong enough to prevent the unemployment rate from rising from May's 5.8 percent rate.
Total payrolls grew by just 36,000 last month half the number analysts were expecting. Job losses in manufacturing and in the retail sector, including car dealerships and department stores, blunted gains elsewhere, making for tepid job growth.
The number of jobs added in May was lowered to 24,000, considerably weaker than the previously reported gain of 41,000 jobs. And, in April, 21,000 jobs were cut, according to revised figures. That was a turnaround from the small increase estimated a month ago.
Although the job market is sluggish, it has improved from a yearlong steady stream of monthly job cuts that began in April 2001 and continued through April of this year.
New claims for unemployment benefits dropped to a 15-month low last week, suggesting that companies are reducing the speed at which they lay off workers. Still, the jobless rate is likely to rise because companies won't be in a rush to hire, economists said.
There were some promising signs for future job growth in yesterday's report.
The length of the average work week rose in June by 0.3 percent to 34.3 hours. "Employers often expand hours of existing employees before hiring new workers," noted Maury Harris, chief economist at UBS Warburg.
Manufacturers who were hardest hit by the recession and are now on the comeback trail aren't cutting as many jobs as they had been.
Factories eliminated 23,000 jobs in June after cutting 27,000 in May. Between March 2001 and January of this year, manufacturing had lost an average of 115,000 jobs a month. In comparison, job losses averaged 63,000 a month in February and March, and 24,000 a month in April through June.
Those who did hold factory jobs saw their average workweek get longer and their overtime edge up. Economists viewed that as an encouraging sign that manufacturers may hire workers later this year.
Citing uncertainties about the recovery's vitality, Federal Reserve policy-makers left short-term interest rates at 40-year lows last week, the fourth time this year they held rates steady. Economists believed yesterday's report raises the odds that the Fed will delay an interest-rate increase until next year.


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