Unemployment edges up to 9.2 % amid sluggish recovery
The U.S. economy added only 18,000 jobs in June as sluggish job gains put a damper on the slow economic recovery for the second month in a row. The number fell far short of 105,000 jobs that economists had predicted for the month. The unemployment rate rose to 9.2% from 9.1% the previous month.
The private sector added 57,000 jobs in June, down from 73,000 a month earlier and the fewest since May of last year. Federal, state and local government jobs fell by a total of 39,000 jobs, the eight consecutive month of government job declines amid struggles to fill state budget gaps.
Economists remain hopeful that hiring will increase in the coming months as supply chain disruptions ease and consumer confidence grows.
“We really do need to see some signs that economic growth is picking up in the near future,” said Goldman Sachs economist Andrew Tilton. “The pressure is on.”
Friday’s job report was weak across the board. Wages edged lower amid tepid hiring. Temporary jobs, a bellwether for the general job market, fell by 12,000 jobs, its third straight monthly decline.
Manufacturing jobs rose by only 6,000, and retailing jobs increased by just 5000. Construction cut payrolls by 9,000 and the financial sector shed 15,000 jobs.
“Every major component of the report was weak,” said Bank of America-Merrill Lynch economist Ethan Harris. “That doesn’t happen very often—usually there’s some little ray of hope. The only silver lining is it might motivate Washington to get its act together.”
The grim jobs report means that the Federal Reserve is unlikely to raise interest rates in the foreseeable future.
Private payrolls, which make up 70% of the work force, are 2.1 million higher than they were at the peak of the recession in 2009, but still 6.7 million below the number in late 2007 before the onset of the recession.
Billionaire Warren Buffett, in a Bloomberg Television interview, remained optimistic that the U.S. economy would avoid another recession.
“I would bet very heavily against that,” Buffett said. “How fast the recovery will come, I don’t know. I see nothing that indicates any kind of a double dip.”
Worries grow over jobs (http://online.wsj.com/article/SB10001424052702303544604576433541086114816.html?mod=djemalertNEWS). WSJ, July 8, 2011
U.S. payrolls grow at slowest pace in nine months as jobless rate climbs (http://www.bloomberg.com/news/2011-07-08/u-s-payrolls-rose-18-000-in-june-jobless-rate-climbed-to-9-2-.html). Bloomberg, July 8, 2011