U.S. jobless rate drops but payrolls slump 44,000
Friday August 1, 8:28 am ET
WASHINGTON, Aug 1 (Reuters) - The U.S. unemployment rate fell in July for the first time in more than a year but in a report on Friday that ran counter to other signs of an economic strengthening, employers chopped 44,000 workers from their payrolls.
The jobless rate slid to 6.2 percent last month from 6.4 percent, the Labor Department said. The decline was caused by an exodus of people from the labor force, not by any surge in hiring.
Indeed, July's payroll drop marked the sixth month in a row the economy has lost jobs. It contrasted with the expectations of private economists that payrolls would grow by 18,000.
The unemployment rate was lower than the 6.3 percent rate projected by U.S. economists in a Reuters survey. It was the first time unemployment rate has fallen since May 2002.
The government said 556,000 departed the labor force, the biggest drop since May 1995. Big drops in the labor force can occur as job seekers become discouraged and abandon their searches. Unless they are actively searching for a job, workers are not counted as unemployed.
There were also signs of weakness elsewhere as the worker hours were cut back to 33.6 hours per week in July from 33.7 hours in June. Factory hours fell to 40.1 hours a week from 40.3 hours in the prior month.
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