8 Nov 2008

US jobless rate highest for 14 years

9:47 am on 8 November 2008

Unemployment in the United States has hit a 14-year high.

The unemployment rate shot up to 6.5% in October from 6.1% in September, as another 240,000 jobs were lost.

It takes the number for the year to 1.2 million after 10 straight months of job losses.

At the same time, US automakers have reported billions in losses.

General Motors reported a $US7.1 billion net loss and rival Ford Motor Co a $US5 billion operating loss for the third quarter.

GM said it would reduce white-collar jobs and cut $US2.5 billion in capital spending next year as part of a revised restructuring plan now aimed at freeing up $20 billion in liquidity through 2009.

Ford said it hoped to improve automotive cash by $US14 billion to $US17 billion through 2010 through the various cost cuts under the expectation that the global downturn will be "deeper, broader and longer than was previously assumed."

The US auto industry has gone to Washington seeking $US85 billion dollars in aid to see it through the crisis.

The losses increase the stakes for leaders meeting in Washington next week for a world summit on how to reform the global financial system.

European ministers have already met and agreed change is needed, including reinforcing the role of the International Monetary Fund as the rescue agency for troubled countries.

Governments around the world have pumped trillions of dollars into saving the financial sector, which was hurt by bad debts in the US housing sector.