US Economy Take a Knock As Unemployment Soars

06 May 2002

The dollar and stocks on the US markets winced Friday after a sharp and unexpected rise in unemployment was reported.

Hopes of a revival in the US employment market were jolted for the second month in succession, with the jobless total in April rising by 0.3 percentage points to 6% - its highest in seven years. Economists had expected an increase to only 5.8% - seemingly a minimal difference on paper but statistically significant.

According to the US labor department's Bureau of Labor Statistics, unemployment increased by 43,000. The data triggered a fall in the dollar against all major currencies, down by one cent to a six-month nadir of $0.917 against the euro.

The employment tidings also impacted adversely on stocks, the Dow Jones Industrial Average edging below 10,000 at midday in New York.

The White House attempted to cool concerns over the unemployment figures, insisting that the US economy is poised to grow. Bruce Kasman, senior economist at J P Morgan in New York also played down the data as a blip on the chart: “It is clear that the economy is not running at the 5.8% rate recorded in the first quarter, but there is little chance of sliding into a double-dip recession," he opined.

Data sourced from: Financial Times; additional content by WARC staff