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Unemployment Rate Rises to 5.9 Percent

Aired July 05, 2002 - 14:29   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: Well, summer finds more people without jobs, and hiring is quite sluggish. The nation's unemployment rate rose just 5.9 percent (sic) last month. The manufacturing sector took the hardest hit, and CNN financial correspondent Kathleen Hays joins us now with the latest on these rather depressing numbers, in some respects, aren't they?

KATHLEEN HAYS: Well, Fredricka, but there are some rays of hope. You might say we took two steps forward and one step back. People still remain cautious. Profits were hit very hard in the last recession. And firms aren't going to leap out and start hiring new workers until they're really sure things are on a solid recovery track.

Let's start by looking at some of the numbers we've got today. The number of new jobs created outside the agriculture sector, non- farm payrolls, rose 36,000. Now, that was about half what Wall Street was looking for. It was a gain, nevertheless.

April was revised to show a loss instead of a gain. May's increase also revised lower. So we've had just two months of increases now on the job front after 13 straight months of declines. But, again it does point to a turnaround.

You mentioned manufacturing. Well, manufacturing lost 23,000 jobs. Twenty-third straight month we've seen losses there. But you know, that loss of 23,000 compares to an average monthly loss in manufacturing of 115,000 last year during the recession. So, again, we're making some improvement.

And we've seen enough increase in industrial production that economists are looking for firms to start hiring there as well. Services sector added only 46,000 jobs. In a really healthy, growing economy, you see a gain three times that big, anyway.

But, again, temporary workers were added for the fifth month in a row. You add temp workers when you see your demand picking up but you're still cautious. You're not ready to take on the added benefit cost of a permanent worker. So again, the increase in temp workers another positive sign looking ahead.

You mentioned the unemployment rate. The tepid rate of hiring, no surprise, we saw the unemployment rate rising from 5.8 percent to 5.9 percent. And economists also reminding us constantly, this is a lagging indicator.

We will probably see unemployment rate peaking, maybe even moving higher, even as the economy continues to recover. So it's not roaring yet but it's moving in the right direction. And as long as the consumer keeps spending and businesses start hiring even moderately, most economists, Fredricka, think it's going to keep going in the right direction.

WHITFIELD: Well, Kathleen, also when people are out of work, it means that they're also willing to move. So, are there certain regions of the country that are finding, or that have a greater opportunity out there for people who are unemployed?

HAYS: I think it's probably spread across the country, Fredricka. You see the services sector is where we're starting to see more jobs being added. Manufacturing, of course, concentrates in the Midwest. We're not seeing a hiring pickup there.

One thing interesting about the unemployment rate that I'd like to add is, people sometimes wonder how it could keep rising even as jobs are being cut (sic). Well, you know, you have to add about 150,000 workers a month just to hold unemployment steady. Because the labor force is growing. We have kids coming into the labor force. We have immigrants. And in order just to hold that unemployment rate steady, you need a rate of job growth that is probably, what, four or five times what we're seeing now.

WHITFIELD: All right, CNN Financial Correspondent Kathleen Hays, thank you very much for joining us.

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