U.S. Job Scenario Worst In Four years

July marked the seventh consecutive month of job cuts by employers in the U.S., indicating that not all was well with the job scenario in the country currently. The U.S economy has lost a total of 463,000 jobs so far this year, although it needs to generate about 100,000 jobs each month just to accommodate the growing population.

A lack of credit has stunted employers' expansion plans and willingness to hire, a Labor Department release stated Friday. The housing slump and high fuel prices are two other major factors that have adversely affected the job scene.

Though July's payroll decline was not as deep as economists had forecast, the rise in the rate of unemployment to 5.7 percent from 5.5 percent surprised many analysts. It also ensured that the level of unemployment was at the highest point since March 2004.

Speaking about the situation, Joel Naroff of Naroff Economic Advisors said, “This was not a good report, and while it may have shown a smaller drop than expected, that isn't saying much.”

Maximum unemployment claims were filed by Americans last week in over five years, according to Labor reports. In what is being seen as worrying news for the already-badgered economy, consumer confidence surveys have indicated that Americans, thwarted by the dwindling job prospects, may trim spending.

As the bracing effect of the tax rebates fade, recession fears are being fanned alarmingly. There were 8.8 million unemployed people in July, up from 7.1 million last year, and more job cuts are expected to be announced. The construction, manufacturing, and retail sectors have been the worst hit.

Companies have buckled under the pressure of the faltering economy.
Starbucks, the world's largest chain of coffee shops, this week said it would cut another 1,000 jobs owing to a slump in sales. This would be over and above the 12,000 jobs the company was scheduled to cut worldwide, as per a July 1 declaration.

Factory payrolls fell by 35,000 this month. At the airlines companies, unemployment figures included 7,000 cuts at UAL's United Airlines and 6,840 at American Airlines’ parent AMR Corp. Construction payrolls fell by 22,000. Payrolls at financial firms, however, remained static after declining 13,000 the prior month.

Service industries, which include banks, insurance companies, restaurants and retailers, laid off 5,000 workers. Retail payrolls decreased by 16,500 this month. Sealed Air Corp., the maker of Bubble Wrap packaging, announced plans to eliminate 900 to 1,000 jobs globally to make up for rising costs.

Other big names have also been hit. GM, Chrysler LLC, Wachovia Corp., Cox Enterprises Inc., and Pfizer also announced job cuts in July. Bennigan's restaurants, owned by the privately-held Metromedia Restaurant Group, have also been adding to the unemployment chaos and laying off people from their rolls.

Still, workers saw wage gains in July. Workers' average hourly wages rose 6 cents, or 0.3 percent, to $18.06, matching economists' predictions. The average work week, however, shrank to 33.6 hours from 33.7 hours.

Average hourly earnings rose to $18.06 in July, a 0.3 percent increase from the previous month as per economists' expectations. Over the past year, wages have grown 3.4 percent.

The situation was, on the other hand, slightly better in the public payrolls sector. Government jobs increased by 25,000, registering the 12th month of gains in public payrolls.