U.S. Unemployment Rate for June Continues Summer Increase

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Researched by Industrial Info Resources (Sugar Land, Texas)--After several months of steady gains in jobs, the unemployment situation in the United States appears to have stalled. For two consecutive months, the jobs numbers, as reported by the U.S. Bureau of Labor Statistics, have only posted modest gains, well under the monthly numbers required to see the national unemployment rate decrease. May's initial gain of 54,000 jobs has now been revised to a much more modest 25,000 jobs, and the numbers in June are no more encouraging. Only 18,000 jobs were created in June, which has caused the unemployment rate to increase from 9.1% to 9.2%.

During any given month, 125,000 jobs must be created to keep pace with normal population growth and to maintain the same unemployment rate as the month before. In order to drop the unemployment rate, twice that amount of jobs must be created monthly. As seen for the last two months, even though the jobs numbers are not in the negatives, the unemployment rate is increasing thanks to population growth.

Part of the problem has been the lack of balanced state budgets across the country, as well as the deficit problems facing the federal government. Government agencies at the federal, state and local levels have cut 238,000 jobs during the last eight months, and those numbers are only likely to continue to increase as governments are attempting to get a handle on their own budgetary issues.

In the private sector, jobs growth has not been occurring as rapidly as is needed to drop the unemployment rate. The manufacturing sector only added 6,000 jobs in June following 5,000 jobs lost in May. The only bright spot was the fabricated metal products sector, which gained 8,000 jobs in June, but that was offset by the wood products sector, which lost 5,000 during the same month. The construction sector, a sector that has been struggling mightily to hang onto jobs, lost 9,000 jobs in June, following a modest gain of 2,000 jobs in May.

The national unemployment rate has exceeded 8% for 29 months. This is the longest period of unemployment this high since the 1930s. Typically, after a recession, the unemployment rate has dropped to the high 6% range. However, this recession has been different, and its effects have taken much longer to reverse, a process that is nowhere near complete. The combination of unrest in several parts of the world and rising oil and gas prices have taken a toll on the U.S. economy post-recession and helped to keep the unemployment situation in the U.S. unsteady.

One of the issues contributing to the slower-than-normal jobs growth situation has been that employers have found that they are capable of doing more with less, thanks to the necessary cutbacks forced on everyone during the recession. Excess baggage was removed during the recession, and companies have found that their leaner operations are capable of higher productivity than they had thought possible. Improvements in automation technology have had something to do with this change in business attitude, and unfortunatly for those who are unemployed, that situation is not likely to change in the near future.

For the unemployment rate to drop significantly, new business is going to have to be wooed and brought to the U.S. In addition, if governmental agencies could find ways to get a handle on their respective budgetary issues, the loss of jobs in that arena could be stemmed. Recovery in the housing market also would go a long way to improve the situation, but that market remains highly volatile and unlikely to change in the near future. The bottom line will come down to private-sector hiring, as it usually does, and finding ways to add employees is becoming more difficult as most companies are finding business to be very profitable as things are now.

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