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Washington - US employment growth ground to a halt in June,
with employers hiring the fewest number of workers in nine months, dampening
hopes the economy was on the cusp of regaining momentum after stumbling in
recent months.
Nonfarm payrolls rose only 18 000, the weakest reading since
September, the Labour Department said on Friday, well below economists’
expectations for a 90 000 rise.
Many economists raised their forecasts on Thursday after a
stronger-than-expected reading on US private hiring from payrolls processor
ADP, and they expected gains of anywhere between 125 000 and 175 000.
The unemployment rate climbed to 9.2%, the highest since
December, from 9.1% in May.
The government revised April and May payrolls to show 44 000
fewer jobs created than previously reported. The report shattered expectations
that the economy was starting to accelerate after a soft patch in the first
half of the year.
The private sector added 57 000, accounting for all the jobs created, with government employment shrinking 39 000 because of fiscal problems at local and state governments.
Economic activity in the first six months of the year was
dampened by rising commodity prices and supply chain disruptions following
Japan's devastating earthquake in March.
White House headaches
Signs the labour market is struggling is a major blow for
the Obama administration, which has struggled to get the economy to create
enough jobs to absorb the 14.1 million unemployed Americans.
The economy is the top concern among voters and will feature prominently in President Barack Obama's bid for re-election next year. So far, the economy has regained only a fraction of the more than 8 million jobs lost during the recession.
At the same time, the Federal Reserve - which wrapped up a
$600bn bond-buying programme last week designed to spur lending and stimulate
growth - appears unlikely to take any further steps to boost the economy.
The economy needs to create between 125 000 and 150 000 new
jobs a month just to absorb new labour force entrants.
Details of the report showed widespread weakness, though
factory payrolls rebounded 6 000 after contracting in May for the first time in
seven months, with the recovery reflecting a step-up in motor vehicle
production.
Construction employment fell 9 000 last month after declining 4 000 in May. Government employment declined for an eighth straight month as municipalities and state governments continued to wield the axe to balance their budgets.
The report also showed the average workweek fell to 34.3
hours from 34.4 hours. Employers have been reluctant to extend hours because of
the uncertainty surrounding the recovery.
Average hourly earnings slipped a penny, more evidence that
wage-driven inflation is not a risk.
