WASHINGTON (Reuters) - U.S. job growth in June essentially ground to a halt for a second month running, suggesting a sharp first half slowdown is not merely a blip, as Wall Street economists and Federal Reserve officials had hoped.
The U.S. economy generated just 43,000 jobs in the last two months, perhaps taking the world’s largest economy skating closer to recession territory.
It was difficult to find a bright spot in the U.S. Labor Department report. Many key labor market signals deteriorated, and the jobless rate rose unexpectedly to 9.2 percent even though the work force actually shrank.
Shaun Osborne, senior currency strategist at TD Securities, summed it up: “The number stinks.” Watch for forecast revisions to second half U.S. gross domestic product.
Following are key details from the Labor Department figures, which could raise questions about whether the Fed should take additional actions to support growth:
** Average hours worked declined and earnings were essentially stagnant. That’s a bad sign because employers often increase hours before taking on new workers.
** Manufacturing added a paltry 6,000 jobs and manufacturing hours worked declined noticeably to 40.3 in June from 40.6 in May.
** Construction employment fell for a second month, reflecting a housing sector that many economists have described as already being in a double-dip.
** The notion that the economy is suffering a temporary slowdown due to effects from Japan’s earthquake and tsunami is becoming harder to sustain given the broad weakness seen in the report.
** Government employment has been steadily declining, falling for twelve of the last 13 months. State and local governments are under extreme budget pressures as their revenues are dented by a weak economy and heavy debt loads.
** Long-term unemployment statistics offer a particularly discouraging picture of the nation’s job woes. Over 6 million Americans, or a record 45 percent of the jobless population, have been without a job for six months or longer.
** Temporary hiring fell by a sharp 12,000, suggesting a reluctance by employers to take on new workers even on a short-term basis. Economists often look to this measure as a
leading indicator on future permanent hiring.
Reporting by Pedro Nicolaci da Costa