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WRAPUP 4-U.S. jobs stall, setting back recovery hopes
July 8, 2011 / 2:45 PM / 6 years ago

WRAPUP 4-U.S. jobs stall, setting back recovery hopes

 * June jobs rise 18,000, govt sheds 39,000 jobs
 * Unemployment rate rises to 9.2 pct from 9.1 pct
 * Average workweek, earnings slip
 (Refiles to add extra links to commentary, video)
 By Lucia Mutikani
 WASHINGTON, July 8 (Reuters) - U.S. jobs growth ground to a
near halt in June, with employers hiring the fewest workers in
nine months, frustrating hopes the economy would bounce back
quickly from a slowdown in the first half of the year.
 Nonfarm payrolls rose only 18,000, the weakest reading
since September, the Labor Department said on Friday, well
below economists' expectations for rise of at least 90,000.
 The unemployment rate climbed to a six-month high of 9.2
percent from 9.1 percent in May even as jobseekers left the
labor force in droves.
 "The message on the economy is ongoing stagnation," said
Pierre Ellis, senior economist at Decision economics in New
York. "Income growth is marginal so there's no indication of
 Stocks on Wall Street opened lower on the data, while U.S.
Treasury debt prices rallied. The dollar was little changed
against a basket of currencies.
  INSTANT VIEW-US jobs growth slows [ID:nnN1E76706G]
  Graphic - U.S. payrolls:
  Graphic - U.S. unemployment:
  Graphic - U.S. payrolls gap:
  Graphic - U.S. labor force:
  Insider Video: Austan Goolsbee, CEA chairman
 The government revised April and May payrolls to show
44,000 fewer jobs created than previously reported.
 The report shattered expectations the economy was starting
to accelerate after a soft patch in the first half of the
 It could prompt calls for the Federal Reserve to consider
further action to help the economy, although officials have set
a high bar after completing a $600 billion bond-buying program
last week.
 "This confirms our view that the Fed will continue to keep
rates on hold into 2012 and if weak employment continues it
will be pushed out even further," said Tom Porcelli, chief
economist at RBC Capital Markets in New York.
 Hopes were high that the economy was starting to find
firmer ground as motor vehicle manufacturers ramped up
production and gasoline prices descended from their lofty
 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.
 The data is a blow to the Obama administration, which has
struggled to get the economy to create enough jobs to absorb
the 14.1 million unemployed Americans. It could stiffen the
resolve of Democrats to push for near-term stimulus as they
seek a deal with Republicans to cut the U.S. budget deficit.
 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.
 Republicans were quick to criticize the administration.
 "Today's report is more evidence that the misguided
'stimulus' spending binge, excessive regulations, and an
overwhelming national debt continue to hold back private-sector
job creation in our country," House of Representatives Speaker
John Boehner said in a statement.
 The economy needs to create between 125,000 and 150,000 new
jobs a month just to absorb new labor force entrants.
 White House economic advisor Austan Goolsbee told Reuters
Insider that the economy was not facing a double-dip scenario,
but said the weak jobs number should be a wake up call for both
Democrats and Republicans to stop bickering about policy.
 "This is not a double-dip. This is a reflection and
reiteration that the growth rate slowed at the beginning of
this year and that clearly has an impact on job creation," he
 The private sector added 57,000 jobs last month, accounting
for all the jobs created, with government employment shrinking
39,000 because of fiscal problems at local and state
 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 ax 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, the first decline
since November and more evidence that wage-driven inflation is
not a risk. Over the past year, earnings have risen only 1.9
 (Editing by Andrea Ricci)

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