Cisco laid off between 600 and 700 workers at its San Jose headquarters today, providing a stark reminder that jobs are still under threat and companies are continuing to cut costs, despite positive signs of recovery elsewhere in the economy.
There was good news today: IBM reported earnings that were well above analysts' expectations after the market closed, and JP Morgan said its second quarter profits rose 36 percent. The Labor Department also reported that continuing jobless claims had dropped by 642,000 from the previous week.
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But minutes from the Federal Reserve's June 23-24 meeting show officials are worried about the health of the job market. A key excerpt:
Labor market conditions were of particular concern to meeting participants. Although some improvements were evident in new and continuing unemployment insurance claims and the May payroll report was less weak than expected, job losses remained substantial over the intermeeting period and the unemployment rate continued to rise rapidly. Rising labor force participation contributed to the increase in the unemployment rate. Some participants pointed out that households' financial strains may be encouraging many individuals to enter the labor market despite difficult labor market conditions. Reports from district contacts suggested that workweeks were being trimmed and that total hours worked were falling significantly. The large number of people working part time for economic reasons and the prevalence of permanent job reductions rather than temporary layoffs suggested that labor market conditions were even more difficult than indicated by the unemployment rate. With the recovery projected to be rather sluggish, most participants anticipated that the employment situation was likely to be downbeat for some time.