After the end of the last US recession in 1991, the unemployment rate did not peak until another year had passed. Yesterday's data showing a steep rise in unemployment in the US do not necessarily mean therefore that the current recession is worsening, some analysts say, but it does underline that there is plenty of pain still to come.
Against that, there has been another rise in consumer sentiment, for the third month in a row, buoyed by a rising stock market and a growing belief that the leading indicators are on the side of recovery rather than decline.
The new jobless figures, showing 331,000 non-farm jobs were lost in November, shocked Wall Street economists who had predicted 189,000 job losses. The US Labour Department also said that the figure for October was worse than first reported, with 468,000 workers laid off rather than 415,000. The US unemployment rate now stands at 5.7 per cent, its highest level since August 1995 and up from 5.4 per cent before September 11th.
The US Federal Reserve, which has predicted a jobless rate above 6 per cent next year, is now likely to make a further rate cut when its policy-making committee meets on Tuesday. The Fed has reduced rates 10 times already this year to a 40-year low of 2 per cent.
US President George W Bush said he found the jobs report "troubling" and said it underlined the need for Congress to approve an economic stimulus package.
The dollar fell on the unemployment report but recovered in anticipation of a further rate cut. Some analysts said the jobless figures showed the recession was deeper than thought. "Some people have begun to say the recession is diminishing in force and I think those conclusions are premature," said Ms Carol Stone of Nomura Securities International New York.
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