Auto industry woes drive up US unemployment rate

15 May 2009

With mounting job losses in the auto industry, the number of unemployed has surged to a record high of 637,000, according to a US government report released on Thursday.

That is an increase of 32,000 from an upwardly revised 605,000 in the previous week, the Labor department said.

Since the recession began in December 2007, the economy has shed about 5 million jobs. The unemployment rate now stands at a 25-year high of 8.9 per cent.
A separate report from Labor department yesterday showed prices paid to US producers rose 0.3 per cent in April as food costs jumped. The increase followed a drop of 1.2 per cent in March.

Wholesale food prices climbed 1.5 per cent, while the price of fresh eggs jumped 44 per cent.

The jobless rate is expected to increase further with the ongoing restructuring process at the nation's two major automobile manufacturers, Chrysler LLC and General Motors Corp.

On Thursday Chrysler asked court permission to cancel 789 car dealership agreements, about a quarter of its estimated 3,188 retail outlets, as the company finds it increasingly difficult to overcome the ongoing crisis.