US unemployment hits 10pc for first time since Ronald Reagan was in power

The US unemployment rate has risen above the 10pc mark for the first time since Ronald Reagan was president, as the worst downturn since the 1930s claimed more casualties.

Worse-than-expected data from the Bureau of Labour Statistics showed that the unemployment rate touched 10.2pc at the end of October, higher than the 9.8pc rate at the end of September, and greater than the 9.9pc rate economists had been expecting.

It is the first time since April 1983 that unemployment has surpassed the politically-sensitive 10pc threshold, a threshold that makes it even more likely that the Federal Reserve will hold interest rates at current record lows for some time.

But in spite of the bad news, US markets managed to stay in positive territory in early trading, with the Dow Jones Industrial Average up 9.98 points at 10,015.94, on several upgrades for General Electric and overall corporate optimism following positive results overnight from a number of companies including coffee retailer Starbucks and media giant CBS.

The so-called Non-farm Payroll data – which measures private and public sectors employment – showed that 190,000 jobs were lost in October, higher than the 175,000 economists had been predicting.

One of the biggest concerns came from manufacturing, where indicators had led economists to predict slight job gains, but in fact saw 61,000 losses in October, up from 45,000 in September.

Two-thirds of the total losses were in the retail sector, as the American consumer continues to be reluctant to spend, while the service sector was also badly hit.

As a result it means that some 8.2m Americans have now lost their job since the start of the recession in December 2007, with more than 15m Americans now out of work.

Dr Christina Romer, chairman of the White House Council of Economic Advisers, said the October unemployment figures contained signs of hope, as well as the painful evidence of labour market weakness.

She also noted that the 10.2pc figure reflects the typical lag between economic growth – given the US economy grew at an annualised rate of 3.5pc in the third quarter – and job market improvement.

"While the US may be officially out of recession, there are too few signs yet that employers have confidence enough to begin taking on new staff," commented Howard Wheeldon, BGC Partners’ senior strategist.

This "suggests that those working in the wider economy are still concerned that the stimulus benefit enjoyed in recent months can be turned into sustainable growth," he continued. (Telegrapg)

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