US unemployment expected to rocket

The US economy lost more than half a million jobs in January, official figures due out later on Friday are expected to confirm, underlining the need for President Obama’s $900bn (£615bn) plan to revive growth.

By James Quinn, Wall Street Correspondent
Last Updated: 1:25PM GMT 06 Feb 2009

The monthly non-farm payroll figures – which combine public and private sector employment – are likely to show that 540,000 jobs were lost last month, according to economists. It will mean that US employers have made more than 1.5m people redundant in the last three months alone.

January saw deep cuts across the world's biggest economy, with more than 60,000 redundancies announced on January 26 alone, at companies ranging from industrial machinery manufacturer Caterpillar to DIY retailer Home Depot. Others to cut included Microsoft, dispensing with 5,000 positions in its first company-wide redundancy scheme in its 35-year-history.

February has so far been no different, with department store retailer Macy’s announcing plans to reduce its headcount by 7,000 positions.

The US Bureau of Labour Statistics release the numbers at 8.30am in Washington, or 1.30pm London time and revisions are also likely to November and December’s figures.

The BLS will also release the unemployment rate – which is calculated using slightly separate data and is expected to rise to 7.5pc – a 16-year high - from 7.2pc at the end of December

Initial jobless claims on Thursday showed a 35,000 leap in the number of people claiming unemployment benefit for the first time in the week to January 31, taking the total to 626,000, a 26-year high.

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