American paychecks get skinnier

WASHINGTON (AP) — Americans lucky enough to still have a job are noticing something unpleasant in their paychecks: They're making less money.

Employers cut 467,000 jobs in June, far more than expected, and the jobless rate hit a 26-year high of 9.5 percent. Just as worrisome, wages shrank to their lowest in nearly a year.

The bleak news Thursday from the Labor Department underscored one of the big threats to an economic turnaround: Rising joblessness and falling wages for those still working could send Americans back into spending hibernation and short-circuit any recovery.

The falling wages come from furloughs, pay freezes and pay cuts imposed by employers across the country. Many also have cut hours: The average workweek in June fell to 33 hours, the lowest on records dating to 1964.

The bleak jobs news sent stocks sinking. All the major stock indexes finished down more than 2.5 percent, including a 223-point drop for the Dow Jones industrials, its worst performance in more than two months.

Job losses had decreased every month since January, but they rose in June. The 467,000 job losses were up from 322,000 in May and far worse than the 363,000 economists were expecting.

By comparison, the rise in the unemployment rate for June was small, up just one-tenth of a percentage point to 9.5 percent. Many economists predict it will hit 10 percent this year and keep rising into next year before falling back.

Including laid-off workers who have given up looking for jobs or have settled for part-time work, the so-called underemployment rate was 16.5 percent in June — the highest on records dating to 1994.

The recession has taken out 6.5 million jobs in about a year and a half. Nearly 15 million people were considered unemployed in June.

Illustrating how hard it is to land a job, 29 percent of the unemployed have been out of work six months or longer. That's the most on records dating to just after World War II.

Meanwhile, orders to U.S. factories jumped in May by the largest amount in nearly a year.

The Commerce Department said that total orders rose 1.2 percent in May, better than the 0.8 percent increase that economists had expected. The April performance was revised slightly lower to a gain of 0.5 percent, from 0.7 percent.