WASHINGTON: US employers cut workers from their payrolls for a sixth straight month last month for the longest losing streak for the labour market since 2002, and a jump in first-time claims for jobless benefits points to more weakness ahead.
The Labour Department said that 62,000 non-farm jobs were lost last month, bringing jobs shed for the year so far to 438,000 as housing market woes chilled growth. The unemployment rate, which shot up sharply in May, held steady at 5.5 per cent.
A separate report showed new applications for jobless benefits hurdling to 404,000 last week, a level associated with recession in the past that suggests further weakness ahead for employment.
"It shows that the labour market still is very soft. We're not seeing dramatic job cuts, but clearly companies are trying to hold the line on costs," said Gary Thayer, senior economist at Wachovia Securities in St Louis.
Analysts polled by Reuters had expected the unemployment rate to edge down to 5.4pc and had expected the economy to shed 60,000 jobs.
The weak tone of the report was buttressed by downward revisions to both May and April's employment count that took their combined job losses to 129,000, compared with an early estimate of 77,000 jobs lost.
Last month, the creation of 29,000 government jobs helped support payrolls. Private-sector employment dropped by 91,000. Average hourly earnings, closely watched by the Federal Reserve as it monitors price pressures to make sure they do not creep into higher wages, edged up six cents, or 0.3pc last month to $18.01.
However, over the past 12 months earnings have risen just 3.4pc, the lowest reading since January 2006.
The Fed last week halted an aggressive interest-rate cutting campaign, holding overnight US rates at 2pc and warning that inflation risks had risen amid soaring energy and food prices. The central bank had been cutting rates to shield growth from a collapsing housing market.
"It does show that the Fed has to hold policy steady for now," Thayer said. "We've now seen job cuts all year long and that suggests that raising interest rates now would probably hurt the economy significantly."
The six-month streak of job losses was the longest consecutive period of shrinking payrolls since employment fell without respite from from March 2001 until May 2002, a period that corresponds to the last US recession and the beginning of a jobless recovery.
There were 43,00 jobs lost in constructionlast month as the housing slowdown continued to bite, while manufacturing shed 33,000 jobs. Both of these sectors have lost jobs in every month over the past year.
Jobs in the professional services sector declined by 51,000 as the financial services and real estate industries continued to suffer the country's housing market woes.