The U.S. unemployment rate hit its highest level in four years during July as employers cut non-farm jobs for a seventh straight month, though less severely than predicted, a Labor Department report on Friday showed.
 

The jobless rate climbed to 5.7 percent from 5.5 percent in
June as 51,000 jobs were eliminated in July, bringing losses
for the year to 463,000. Analysts polled by Reuters had
expected 75,000 jobs would be cut last month but had forecast
the unemployment rate would rise only to 5.6 percent.
 

The department trimmed its its estimates for job losses in
each of May and June. It said 47,000 jobs were cut in May
instead of 62,000 and 51,000 in June rather than 62,000 -- a
total of 26,000 fewer jobs lost in the two months than
previously thought.
 

U.S. equity index futures and the dollar rose after the
closely watched employment data was issued, while U.S.
Treasuries turned negative. Fed fund futures trimmed gains and
now see a 30 percent chance of September rate hike, up from 26
percent before the jobs report was issued.
 

Brian Gendreau, an investment strategist with ING
Investment Management Americas in New York, described the
monthly job losses as "painful" and consistent with a weak
economy.
 

"We are clearly in a growth recession and my fear is that
we are in a mild, but longer recession than the one we
experienced in 2001-2002," Gendreau said.
 

The unexpectedly steep climb in the unemployment rate
underlines how a continuing deterioration in the housing
markets continues to chill economic growth. The last time the
jobless rate was higher was in March 2004 when it hit 5.8
percent.
 

While July's job loss was not as bad as feared, it did not
change the picture of an economy that is basically treading
water, analysts said.
 

"Overall the report looks to be broadly consistent with
other data that show the economy quite soft, basically stalled,
not growing very much, but not contracting very much either,"
said David Resler, chief economist for Nomura Securities
International in New York.
 

Department officials said there were large rises in the
jobless rate for 16-to-24-year-olds. In addition, the average
workweek slipped to 33.6 hours, the lowest since November 2004,
from 33.7 hours in June.
 

Job losses in July were widespread. The only major sectors
showing any gains were government, hospitality, and education
and health services. Construction industries shed another
22,000 employees and factories cut 35,000 jobs.