Unemployment rate hit a new high over the past four years, or the Fed will continue to keep rates unchanged

As enterprises continue to layoffs, the U.S. unemployment rate in July surged to four-year high, showing that the U.S. economy is still possible in the second half of this year into a recession.

But analysts pointed out that as the July employment data had worried about the decline not as bad, which means that even if the economic downturn, the rate may also be more moderate. The next Fed meeting will be held on August 5, expect the Fed's policy meeting on interest rates will remain unchanged.

High unemployment

The Labor Department announced last Friday, July non-farm payrolls fell 51,000, and in June the same rate of reduction, and spread to wider areas, including manufacturing, construction and service industries such as employment have decreased. May non-farm payrolls fell 47,000 people.

Another survey shows that the U.S. unemployment rate in July rose 0.2 percentage point to 5.7 percent for March 2004 the highest level since. The Labor Department said that in the past three months, the number of U.S. youth unemployment a significant increase over the age of 25 at the same time the number of unemployed also increased. July the average hourly wage increased 0.06 U.S. dollars to 18.06 U.S. dollars, an increase of 0.3 percent. July the average hourly wage over the same period rose only 3.4 percent. Analysts pointed out that this shows that the weakness in the labour market situation, very difficult to pay workers. Prior to the survey of Wall Street economists expect the U.S. July non-farm payrolls number will be reduced by 65,000 people, the unemployment rate was 5.6 percent.

The report showed that, in July the U.S. commodity production sector employment reduction in the number of 46,000 people, since October of last year the smallest decline.

In addition data also show that in July the U.S. service sector employment fell 15,000. Employment in the financial sector flat. Employment in the retail industry to reduce 16,500 people, the first eight months of consecutive decline. Employment growth mainly concentrated in the private service sector, which continues the recent trend, why is this area than the manufacturing sector and other areas of labour-intensive services a higher level.

Difficult choices to make interest rate increase

In addition, the same day the U.S. Institute for Supply Management data showed the U.S. manufacturing index in July from June's 50.2 percent to 50.0 percent, showed that U.S. manufacturing activity in July no signs of expansion or contraction. Wall Street economists had expected the index in July fell to 49.5 percent.

The latest employment data in July confirmed Wall Street's view that the Fed's next monetary policy meeting Tuesday on the federal funds target rate unchanged at 2%. From last September to April this year, in order to prevent the housing market downturn and the financial markets led to tension in a serious economic downturn, the Fed has accumulated federal funds target rate by 3.25 percentage points lower.

Analysts point out that Fed officials are pinning hopes on the economic slowdown brought about by controlling inflation can offset the effect of energy, food and commodity prices rising influence, which will keep inflation in the controllable range. Fed officials had said last month that they expected at the end of this year, the unemployment rate at 5.5 percent -5.7%. As of now, the U.S. economy seems to have escaped the severe decline in bad luck. Following the end of last year after a contraction in the economy, the United States in the first and second quarters of the GDP respectively over the same period last year increased by 0.9% and 1.9%. Energy prices, the housing market, the financial markets and the adverse employment situation also indicated that Fed officials may not be in 2009 before raising interest rates. (China Securities News)