Unemployment: 9.5%; payroll job loss greater than expected

WASHINGTON -- Employers cut a larger-than-expected 467,000 jobs in June, driving the unemployment rate up to a 26-year high 9.5%, according to the Labor Department.

The report showed that even as the recession shows signs of easing, companies likely will want to keep a lid on costs and be wary of hiring until they feel certain the economy is on a solid ground.

June's payroll cuts were deeper than the 363,000 economists expected.

However, the rise in the unemployment rate from 9.4% in May wasn't as sharp as the expected 9.6%. Many economists predict the jobless rate will hit 10% this year, and keep rising into next year, before falling back.

All told, 14.7 million people were unemployed in June.

If laid-off workers who have given up looking for new jobs or have settled for part-time work are included, the unemployment rate would have been 16.5% in June, highest on records dating to 1994.

Yet even with the high pace of job cuts in June, the report indicates the worst of the layoffs may have passed. The deepest job cuts of the recession came in January, when 741,000 jobs vanished, most in any month since 1949.

"We were on the road of things getting less bad in the jobs market, and that has been temporarily waylaid," said economist Ken Mayland, president of ClearView Economics. "But this doesn't change my view that the recession will end later this year. We're probably two months away."

In a separate report, the Labor Department said the number of newly laid-off workers filing applications for unemployment benefits fell last week to 614,000, in line with economists' predictions. The number of people continuing to draw benefits unexpectedly dropped to 6.7 million.

The Commerce Department also offered some upbeat news Thursday with the release of a report showing orders to factories jumped in May by the largest amount in nearly a year. Total orders rose 1.2% in May, better than the 0.8% increase that economists had expected.