US loses 62,000 jobs during June

US firms cut workers for a sixth month in June, official figures show, stoking fears that the world's largest economy was heading towards a recession.

The economy lost 62,000 non-farm payrolls in June, the Labor Department said. It follows a newly revised figure of 62,000 jobs also lost in May.

Despite the reduction in payrolls, the unemployment rate was steady at 5.5%.

US companies have been reluctant to add staff amid higher oil and food prices, and slowing economic growth.

Gary Thayer of Wachovia Securities said that the payroll figures showed that the labour market was still very soft.

"We're not seeing dramatic job cuts, but clearly companies are trying to hold the line on costs," he said.

"It suggests that it's still a rough economy."

The US economy has shed jobs at an average rate of 73,000 a month, marking a total of 438,000 job losses so far this year.

Some economists are already predicting the unemployment rate will climb to 6% or higher in early 2009.

'Hard landing'

The majority of job losses in June came in the construction, financial services and manufacturing areas though retailers also shaved staff numbers.

These losses overshadowed the gains seen by the health service, education and leisure and hospitality and government sectors.

Consumer spending accounts for two-thirds of US economic activity and companies are worried that consumers are continuing to tighten their belts amid spiralling food costs and fuel costs.

On Thursday, the price of oil powered to a new record, hitting a fresh peak of $146.34 a barrel.

Many analysts are predicting that these factors will continue to dampen consumer demand and have a negative impact corporate profits.

At the same time, there is growing evidence that US firms are seeing a decline in demand for their services and goods.

On Wednesday, figures showed that factory orders climbed by the smallest amount for three months during May.

According to the Commerce Department, factory orders rose 0.6% in May, less than half the increase seen in April and March.

Without the support of transportation orders, which rose 2.5% on the back of rising orders for aircraft, the fall in orders would have been more dramatic. Excluding transportation orders, factory orders rose by 0.4%.

"The economy is at risk of a hard landing," said Brian Bethune of Global Insight.