MW: Hiring weak in June, with only 18,000 jobs created
Report could raise fears of double-dip
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — The U.S. economy added jobs at an even slower pace in June than in May, suggesting that the sudden slowdown in the economy might be long-lasting and more severe than feared.
Nonfarm payrolls rose by only 18,000 in June, well below the 125,000 gain expected by economists surveyed by MarketWatch.
Job gains in May were revised down to 25,000 in May from the initial estimate of 54,000.
Employment growth has ground to almost a halt in the last two months after several months of strong gains.
Employment rose by an average of 215,000 per month from February through April but now has only averaged 22,000 over the past two months.
The unemployment rate ticked higher to 9.2% in June from 9.1% in the previous month, reaching the highest level since December. Economists had expected the unemployment rate to remain steady. The jobless rate has risen steadily from 8.8% in March.
The report could raise fears of a double-dip recession, and the market showed those concerns, with S&P 500 futures SP1U -1.23% turning south by over 1%. The dollar fell against the Japanese yen and the yield on the 10-year Treasury bond fell 8 basis points to 3.06%.
Though a private payrolls report from Automatic Data Processing yielded a much different result, Friday’s report from the Labor Department provides no evidence that the slowdown in job growth in temporary.
The slowdown comes as a surprise to economists who prior to the report expected a pickup in growth in the second half of the year. Federal Reserve officials had recently forecast a 3.5% growth rate over the next 18 months.
The weak report creates a conundrum for the central bank. Last month, the Fed ended its $600 billion bond buying program despite signs of a slowdown and said no new easing was needed.
Details of the report were weak.
Average hourly earnings in June were flat. Economists had been expecting a 0.2% gain. Earnings are up 1.9% in the past year, well below the 3.6% gain in the consumer price index.
The average workweek fell six minutes to 34.3 hours.
The factory workweek fell sharply and overtime edged down, which points to a weak industrial production report for June.
Employment in manufacturing was flat in May and June following six months of gains.
Employment in government continued to trend down, falling by 39,000.
