Jobless rate hits five-year high in August

The unemployment rate reached a five-year high in August as 84,000 jobs were cut. During the past 12 months, the unemployment rate has risen from 4.7 percent to 6.1 percent, and 2.2 million people in the U.S. have lost their jobs.

So far in 2008, 605,000 workers have lost their jobs—an average of 76,000 per month.

"It doesn't have the air of being a full-fledged recession," says Bill Cheney, chief economist for John Hancock Financial, Boston. "But the really alarming part is the unemployment rate, which has already gone up more than expected in July and took another leg up in August. That's definitely kind of shocking."

The number of long-term unemployed (those who have been out of work for six months or more) increased 163,000 to 1.8 million and has increased by 589,000 during the past 12 months.

The manufacturing and construction industries continue to suffer. Manufacturing employment cut 61,000 jobs in August, and the construction industry lost 14,000 jobs, which is an improvement from the first half of the year when an average of 45,000 construction jobs were lost each month. The services sector also is suffering while health care and government jobs increased.

The unemployment rate was highest for teenagers at 18.9 percent; blacks at 10.6 percent; and Hispanics at 8 percent. The August unemployment rate for whites was 5.4 percent.

Pay increases have not been able to match inflation increases. During the past 12 months, average hourly earnings increased 3.6 percent and average weekly earnings increased 3.3 percent; consumer inflation has risen 5.6 percent.

In response to the struggling economy, the Federal Reserve has cut a key interest rate to 2 percent and is expected to keep rates at the current low level for a while.

Date : 9/8/2008