US unemployment likely to hit 10%

WASHINGTON: The jobless rate in the US is likely to approach 10% in coming months as the economy fails to grow quickly enough to employ people rejoining the labour force, according to economists at BofA Merrill Lynch Global Research and Morgan Stanley.

Private payrolls climbed 67,000 in August, after a gain of 107,000 the previous month, and the unemployment rate rose to 9.6%, Labour Department figures showed September 3. The economy expanded at a 1.6% annual rate in the second quarter, down from 3.7% in January through March.

Employers, including government agencies, have added 723,000 workers to payrolls so far in 2010, showing it’ll take years to recoup the 8.4 million jobs lost during the recession, the biggest employment slump in the post-World War II era.

Still, the August employment report eased concerns the economy will falter and may postpone action by Federal Reserve policy makers aimed at bolstering the recovery. “Growth is too sluggish to successfully bring down the unemployment rate,” said Michelle Meyer, a senior economist at BofA Merrill Lynch. “At this stage, about one year into the recovery, this was still quite feeble job growth.”