US job loss numbers may be levelling out

The pace of US job losses slowed more than forecast last month and the unemployment rate dropped for the first time in more than a year, the clearest signs yet that the worst slump since the Great Depression may be ending.

Payrolls fell by 247,000, after a 443,000 loss in June, the Labour Department said in Washington. The jobless rate unexpectedly dropped to 9.4 per cent from 9.5 per cent.

The figures sent stock indexes soaring to their highs for the year and 10-year Treasuries to their worst week since 2003. At the same time, the White House warned the jobless rate was still likely to reach 10 per cent, and with companies from Boeing to Verizon Communications cutting costs, any rebound might not come until 2010.

"History will be written that the recession ended in the summer of 2009," said Alan Blinder, an economics professor at Princeton University. Blinder, vice-chairman of the Federal Reserve from 1994 to 1996, added that while "we're past the bottom" in terms of economic contraction, in employment "we're still going downhill, but downhill at a slower rate".

The Standard & Poor's 500 Stock Index closed up 1.3 per cent at a 10-month high of 1010.48 on Friday (US time). The yield on the benchmark 10-year note climbed to 3.85 per cent from 3.75 per cent the previous day.

The latest numbers brought total jobs lost since the recession began in December 2007 to about 6.7 million, the biggest decline in any post-World War II recession.

Jeffrey Frankel, who sits on the National Bureau of Economic Research's business-cycle dating committee, said the report indicated the recession might have ended in July as the labour market improved. "I haven't felt that there have been any previous months for saying this will turn out to be the bottom, but this one is definitely a candidate."

The average work week grew to 33.1 hours in July from 33 hours in June. Average weekly hours worked by production workers increased to 39.8 hours, while overtime held at 2.9 hours. That brought the average weekly earnings up to US$614.34 ($915.36).

Workers' average hourly wages rose 0.2 per cent to US$18.56 from June, and climbed 2.5 per cent from July 2008.

Administration officials including Lawrence Summers, director of the White House National Economic Council, predict most new jobs resulting from stimulus programmes will come in 2010.

- BLOOMBERG