Unemployment: 9.5%; Obama says he's 'deeply concerned'

WASHINGTON -- The nation's unemployment rolls swelled by 467,000 in June, reversing a recent trend of slowing job losses and raising questions about a widely anticipated second-half recovery.

The unemployment rate edged up only slightly, to 9.5% from 9.4% as 155,000 Americans left the work force, the Bureau of Labor Statistics (BLS) said in its monthly survey. Many were likely discouraged workers who gave up their job searches, says Sung Won Sohn, economics professor at the Smith School at California State University.

Still, the jobless rate is the highest since August 1983. And the so-called underemployment rate — which includes the unemployed, people working part time even though they wanted full-time work and those who stopped looking for work— ticked up to 16.5% from 16.4%.

President Obama said Thursday he is "deeply concerned" about unemployment and conceded that too many families are worried about "whether they will be next" to suffer economically.

In a White House interview with The Associated Press, Obama said since he took office, "we have successfully stabilized the financial markets," and "started to see some stabilization on housing... But what we are still seeing is too many jobs lost."

"Many businesses are very scared," Sohn says. "They're not about to start hiring people until they see sure signs that the economic recovery is here for good."

A record 14.7 million people were out of work last month and 6.5 million jobs have been lost since the recession began in December 2007. Sohn says he expects unemployment to hit 10.8% later this year before peaking at about 11% in 2010.

After chopping nearly 700,000 jobs each month in the first quarter, the cuts slowed to 519,000 in April and 322,000 in May according to revisions announced by BLS Thursday. With many economists forecasting about 365,000 job losses last month, the unexpected rise prompted some to question the strength, if not the timing, of any economic upturn later this year.

"It does raise questions about the extent of the second-half recovery," says Joel Naroff, president of Naroff Economic Advisors.

Investors were disappointed. The Dow Jones industrial average was down 2.6% in Thursday trading.

But some experts were more sanguine. John Ryding of RDQ Economics said the report still shows moderating job losses compared with the first quarter. And he noted the jobless totals were inflated by the federal government's layoff of 50,000 temporary U.S. Census workers. The government plans to hire large numbers of census workers next year.

Government jobs at all levels fell by 52,000 after an increase of 40,000 federal government positions. Naroff said he expected the economic stimulus package to have spawned more government slots by now.

Teenagers were especially hard hit by the job scarcity. The unemployment rate for Americans age 16 to 19 jumped to 24% from 22.7%.

And the number of Americans out of work six months or longer rose to a record 4.4 million, or 29% of the unemployed, up from 27% in May.

Beyond the jobless totals, the report underscored that even Americans who are still working are feeling the pain of a dismal economy.

The average work week dipped to 33 hours from 33.1 hours in May, lowest since the government began tracking the figure in 1964, as employers continue to slice hours and impose furloughs. Meanwhile, average hourly earnings were unchanged at $18.53. Analysts expected an increase of 0.1%. The shrinking paychecks are likely to dampen consumer spending, slowing the economic rebound.

Aggregate hours worked in the private sector fell 0.8%. Sohn says that will likely translate to a 2% drop in gross domestic product in the second quarter, vs. consensus estimates of a 1% to 1.5% decline.

Jobs were eliminated across a wide swath of industries:

• Manufacturers cut 136,00 jobs, including 27,000 in the auto industry.

• Professional and business services, including accounting and legal offices, shed 118,000 jobs after the industry had roughly halved that total in May.

• Construction lopped 79,000 slots, more than the 59,000 cuts in May but still less than earlier totals.

• Retailers cut 21,000 jobs as losses in the sector continued to ease.

• The few industries adding jobs included education and health services, which added 34,000 last month and 47,000 in May.

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.

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. Orders rose 1.2% in May, better than the 0.8% increase economists had expected.