UNEMPLOYMENT HITS 9.7%: Highest in US in 26 years

TOUGH ROAD AHEAD

The unemployment rate jumped almost half a point to 9.7 percent in August, the highest since 1983, reflecting a poor job market that will make it hard for the economy to begin a sustained recovery.

While the jobless rate rose more than expected, the economy shed a net total of 216,000 jobs, less than July’s revised 276,000 and the fewest monthly losses in a year, according to Labor Department data released Friday. Economists expected the unemployment rate to rise to 9.5 percent from July’s 9.4 percent and job reductions to total 225,000.

Although there have been signs that the US economy is now recovering from the worst recession in 70 years, unemployment has remained high and could dampen any economic rebound.

However, Nigel Gault, chief US economist at IHS Global Insight, said that the rise in the jobless rate was not too discouraging. “The decline last month was too good to be true, really. It’s too early for the unemployment rate to be coming down, of course we’re still losing jobs,” he said.

“What I would take encouragement from is the fact is the trend in the rate of decline in jobs is still improving, that private sector jobs were down 198,000, that’s 50,000 better than the previous month and it’s almost 200,000 better than the month before that.”

Most cuts were seen in the construction industry, with 65,000 jobs lost in the month. Health care and educational services was the only bright spot, adding 52,000 jobs.