Unemployment Woes Likely To Continue
CNN Money reports that unemployment is likely to continue to rise as companies cut more jobs, according to the Employment Trends Index (ETI). The Index said the decline in Mays reading suggests that the labor market hasnt yet hit bottom. The Index reads back 35 years and found that it accurately predicts all turns in the labor market during that period. The Index has fallen by 6% from its peak in July, with a 0.5% decline between April and May. The peak was as low as the April reading was in December 2004.
The Labor Department recently reported the fifth straight month of job losses, with employers trimming 49,000 jobs from payrolls in May. The unemployment rate posted its largest jump in 22 years, rising to 5.5% from 5% in April.
According to the group, the Index would have to show two to three months of gains, including positive readings for multiple components, before the Index would predict a rebound for the labor market. Keith Hembre, chief economist of First American Funds, expects more payroll losses of about 50,000 to 60,000 jobs a month through the second half of the year. He also thinks the unemployment rate is likely to reach 6% sometime in early 2009.