US Jobless Spike

The US has lost jobs for the fifth month in a row at 5.5 percent as the jobless rate spiked (increasing by 0.5%) as a consequence of a class of students graduating schools and moving into the workforce. This is the largest spike in teenage unemployment since 1948. The spike was larger than every forecast from a Bloomberg News survey of economists. Allen Sinai, chief economist at Decision Economics in New York, has said that "Most of the economy looks in recession.'' Also Ten-year Treasury yields dropped to 3.92% in New York, from 4.04% on Thursday. The Standard & Poor's 500 stock index fell 3.1% to 1360.68.

The Jobless rate for the US is at its highest since October 2004 while the 0.5 percent increase in the unemployment rate was the largest spike since February 1986. Young people are "swelling the labor pool, but they're also leading to a higher unemployment rate,'' said Roger Kubarych, chief US economist at Unicredit Global Research in New York. "It used to be you stayed in school until the middle of June, late June.'' Lehman Brothers economists estimated the unemployment rate may drop back by 0.1 or 0.2 percentage point in June because of the seasonal-adjustment effect. The average work week was unchanged at 33.7 hours and the factory work week also remained unchanged at 41 hours. Overtime decreased to 3.8 hours from 4 hours. That brought the average weekly earnings up by 0.3% to $US604.58 last month. Workers' average hourly wages rose by 5 cents, or 0.3%, to $17.94. Economists had forecast a 0.2% increase from the prior month.