Jobless rate rises to 4-year high of 5.7 percent

WASHINGTON - The nation's unemployment rate climbed to a four-year high of 5.7 percent in July as employers cut 51,000 jobs, dashing the hopes of an influx of young people looking for summer work.

Payrolls cuts, however, weren't nearly as deep as the 72,000 economists were forecasting. And, job losses for both May and June were smaller than previously reported.

July's reductions marked the seventh straight month where employers eliminated jobs. So far, this year, the economy has lost a total of 463,00 jobs.

The latest snapshot, released by the Labor Department on Friday, showed that employers remain cautious as a lack of credit stunts their expansion plans and willingness to hire. Fallout from the housing slump and high energy prices also are weighing on employers.

The increase in the unemployment rate to 5.7 percent, from 5.5 percent in June, in part came as many young people streamed into the labor market looking for summer jobs. This year, however, fewer of them were able to find work, the government said. The unemployment rate for teenagers jumped to 20.3 percent, the highest since late 1992.

Still, Wall Street found reason for optimism in the report. Stocks appear headed for a higher opening.

The economy is the top concern of voters and will figure prominently in their choices for president and other elected officials come November. The faltering labor market is a source of anxiety not only for those looking for work but also for those worried about keeping their jobs during uncertain times.

Job losses in July were the heaviest in industries hard hit by the housing, credit and financial debacles. Manufacturers cut 35,000 positions, construction companies got rid of 22,000 and retailers shed 17,000 jobs. Those losses swamped job gains elsewhere, including in the government, education and health care.

Employers are reducing their work forces as they struggle to cope with fallout from the housing, credit and financial crises. High energy prices also have squeezed profits.

General Motors Corp. Chrysler LLC, Wachovia Corp., Cox Enterprises Inc. and Pfizer are among the companies that have announced job cuts in July.

GM Friday reported a $15.5 billion loss in the second quarter as North American vehicle sales plummeted and the company faced expenses due to labor unrest and its massive restructuring plan.

On July 15, GM announced a plan to raise $15 billion for its restructuring by laying off thousands of hourly and salaried workers, speeding the closure of truck and SUV plants, suspending its dividend and raising cash through borrowing and the sale of assets.

GM also said it would reduce production by another 300,000 vehicles, and that could prompt another wave of blue-collar early retirement and buyout offers.

Meanwhile. Bennigan's restaurants owned by privately held Metromedia Restaurant Group, are closing, driving more people to unemployment lines.

With more job cuts expected in coming months, there's growing concern that many people will pull back on their spending later this year when the bracing effect of the tax rebates fades, dealing a dangerous blow to the fragile economy. These worries are fanning recession fears.