51,000 jobs vanish in July as unemployment hits 5.7%

Stores, factories and other businesses large and small showed workers the door last month, sending unemployment to its highest rate in four years and adding to the evidence an economic recovery remains far off.

Employers clamped down on hiring and cut 51,000 jobs in July, the Labor Department said Friday. The economy has shed jobs each month this year – 463,000 in all.

The unemployment rate rose to 5.7 percent, up from 5.5 percent in June.

The jobs report contributed to a day of grim news for the economy. General Motors reported a staggering quarterly loss of more than $15 billion and said its sales fell by more than a quarter from last year.

The Commerce Department said spending on construction projects around the country dropped 0.4 percent in June as cutbacks in home building eclipsed gains in commercial construction.

And manufacturers' business was flat in July. The Institute for Supply Management's reading of activity from the producers of cars, airplanes, appliances and other goods hit 50, down from 50.2 in June. A reading above 50 signals growth.

Job losses in July were the heaviest in industries hard hit by the slow housing market, the clampdown on credit and the shaky financial sector. Manufacturers cut 35,000 jobs, construction companies 22,000 and retailers 17,000.

Temporary help firms, also viewed as a barometer of demand for future hiring, eliminated 29,000 jobs.

Those losses swamped job gains elsewhere, including in the government, education and health care.

It's not news to B.B. Hooks, 40, who was laid off in May from her job as a teacher in Washington, D.C. She says she's applied online for hundreds of jobs in the communications and public relations fields, with no luck.

She applies for jobs online to save on gas, but it's harder to talk to potential employers face-to-face, and she has to register at each company's Web site.

“I must have a trillion different passwords for a trillion different Web sites,” she said.

More pink slips are expected. Analysts predict a half-million more jobs could disappear over the rest of this year and say unemployment could climb to 6.5 percent by the middle of next year.

With the employment situation deteriorating, there's growing worry that consumers will cut back on spending later this year, further hurting the economy.

“People will absolutely shut off the spending spigots given the soured jobs market,” predicted Richard Yamarone, economist at Argus Research. “The economic environment is in crummy shape.”

Capitol Hill Democrats renewed their push for a second stimulus package. The Bush administration and other Republicans have been cool to the idea.

The White House was “displeased” with the jobs report, press secretary Dana Perino said. She said the White House was “working to improve the job outlook for our economy.”

Still, the job losses were not as bad as some feared.

Economists had been expecting 72,000 jobs lost for July.

The government also revised the job-loss figures for May and June to a combined 98,000, down from 124,000.