INSTANT VIEW: U.S. payrolls fall more than expected in June

NEW YORK (Reuters) - U.S. employers cut 467,000 jobs in June, far more than expected, while the unemployment rate rose to 9.5 percent, the government said on Thursday in a report that showed a labor market continuing to struggle with a deep recession.

KEY POINTS: * The June job losses were more than 100,000 greater than the 363,000 consensus of Wall Street economists polled by Reuters and broke a four-month trend of moderation in job losses. * The Labor Department data showed that in April and May, 8,000 fewer jobs were lost than previously reported. The May job losses were revised downward to 322,000, while the April losses were revised upward to 519,000. * The jobless rate of 9.5 percent compares with 9.4 percent in May and was the highest since a matching unemployment rate in August 1983. Analysts had expected the rate to rise to 9.6 percent.

COMMENTS:

NIGEL GAULT, CHIEF U.S. ECONOMIST, IHS GLOBAL INSIGHT, LEXINGTON, MASSACHUSETTS:

"I don't think it means that the story that the economy is bottoming out is wrong, I still think that is the right story. But it's evident that it's going to be a much longer process to bottom out in the labor market than it is to bottom out in the in the auto market or industrial production or GDP.

"When does the recession end, in the sense of thinking about output and industrial production declines? I think it ends in the third quarter. But when does it end in the sense of employment stabilizing, that's probably not until the first quarter of next year. When does it end in the sense of unemployment rates starting to come down, now that may not be until the middle of 2010.

"In the payrolls report, average hourly earnings flat, no change on the month, which is an indication of the pressure that is being put on wages by rising unemployment.

JOE SALUZZI, CO-MANAGER OF TRADING, THEMIS TRADING, CHATHAM, NEW JERSEY:

"Terrible. I always look at the real unemployment which is the U6 number -- it came in at 16.5, that's up from 16.4 last month. That's the real amount if unemployed people out there. So it's still very, very high. If anything you see wage growth is not there, hourly earnings and the work week is lower. Now you have a recipe that is a mess here, because nothing is improving. People still want to say that unemployment is a lagging indicator, I don't get that.

"Unemployment to me is a telling indicator, it tells me the economy is still in shambles, there has been no patchwork going on out there. The only thing we've got going is stimulus, which is government, Fed type stuff. There's a lot of problems still. So people have to come back down to earth and realize where we are. This should not have been a surprise to anyone. Now we'll just wait to see how they want to positively spin it, but I think it's an awful number and it gets worse next month."

MIKE FITZPATRICK, VICE PRESIDENT, ENERGY, MF GLOBAL, NEW YORK:

"It shows an economy still in distress that can only be echoed in earnings reports after the holidays."

KEITH HEMBRE, CHIEF ECONOMIST, FAF ADVISORS, MINNEAPOLIS:

NON-FARM PAYROLLS: "It looks pretty darn weak in terms of the income generating components. That's something we need to keep an eye on going forward with the stimulus effect largely behind us now. The goods producing job area is pretty weak.

"The job market is terrible. It's as bad as we've seen in our life-time.

"The light at the end of tunnel is that we see some stability in domestic demand and some demand overseas which reduce the need for job separations."

JOBLESS CLAIMS: "For a stable unemployment rate, you need weekly claims at about 400,000 on trend basis. It's not pointing to any improvement in payrolls in July. We are at a point of exhaustion rate in unemployment benefits with some workers rolling off the roll."

WILLIAM SULLIVAN, CHIEF ECONOMIST, JVB FINANCIAL GROUP, BOCA RATON, FLORIDA:

"It looks like the economy was still losing substantial momentum as the second quarter came to a close. This report is weak across the board. The only saving grace is that the decline in payrolls may not be as large as we saw at the start of the year.

"Historically this is still a large drop. The unemployment rate is still moving higher. More importantly for the outlook for consumer spending, earnings were flat. These job losses are being associated with a decline in personal income growth.

"This should help the Treasury market. In the long run this should be positive for Treasuries as it suggests we will maintain a disinflationary environment for the indefinite future."

CARL LANTZ, U.S. INTEREST RATE STRATEGIST, CREDIT SUISSE, NEW YORK:

"It is definitely a weak number all around. The combination of lower hours, unchanged wages and lower employment all means lower income, which is going to weigh on consumer spending going forward.

"It is definitely bond bullish."

SUBODH KUMAR, CHIEF INVESTMENT STRATEGIST, SUBODH KUMAR & ASSOCIATES, TORONTO:

"The number were worse than consensus, and the consumer end is weak. All kinds of companies have been saying that this is weak.

"I think the markets have been hoping for at least a good rebound, if not a rapid one. I think we'll probably pull back today, but with the long weekend coming up, and earnings coming up, we're going to be in a correction next week as well. The next thing we're waiting for is the earnings."

MARKET REACTION: STOCKS: U.S. stock index futures extend losses BONDS: U.S. Treasury debt prices rise DOLLAR: U.S. dollar erases gains versus yen