U.S. employers cut jobs for sixth straight month

And as job losses mount, even those still on payrolls have felt the pain: employers are cutting hours for their full-time employees and shrinking salaries, just as workers face record-high prices for gasoline and food.

The unemployment rate stayed steady in June at 5.5 percent, the highest level in four years. The elevated figure dispelled speculation among some economists that last month’s half-percentage point jump, the biggest monthly spike in 22 years, was a statistical anomaly.

In the last 50 years, the economy has entered a recession every time jobs have dropped for six consecutive months.

The U.S. economy needs to add more than 100,000 jobs each month just to keep up with growth in the working-age population. Over the past 6 months, nonfarm payroll employment has fallen more than 400,000. So job creation this year has fallen well over a million jobs short.

Democrat Obama seized on the disappearance of 62,000 nonfarm jobs to seek to link his Republican adversary to what he said were President George W. Bush's failed economic strategy.

"The American people are paying the price for the failed economic policies of the past eight years, and we can't afford four more years of more of the same," said Obama in a statement.

"That is the essential issue of this campaign, because Senator McCain has fully embraced the Bush economic agenda. I believe it has to change."

McCain meanwhile, wrapping up a visit to Mexico and Colombia which he has used to accuse Obama of wanting to establish protectionist trade barriers, also sought to identify with those feeling the pinch.

"Americans across this country are hurting and today's job numbers are just the latest indication," McCain said in a written statement.

"At a time when our small businesses need support from Washington, we cannot raise taxes, increase regulation and isolate ourselves from foreign markets," McCain said.

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.