Hiring stays slow in June; unemployment holds at 8.2%

Posted July 06, 2012, at 5:56 p.m.

WASHINGTON — Employers added a weaker-than-expected 80,000 jobs in June and the unemployment rate held steady at 8.2 percent, the government said Friday, in the third consecutive monthly report that showed soft hiring.

Consensus economic forecasts had called for growth of 100,000 jobs or higher for the month, given that previous months were thought to have been skewed by weather trends, bad news out of Europe about its debt crisis and statistical adjustments.

Adding to the expectations, a closely watched gauge of private-sector hiring had suggested a day earlier that 176,000 jobs were created in June, setting the bar high for the official government report.

Instead, June looked a lot like May and April, and the three months together combined for a weak quarter in which job growth averaged about 76,000 a month, compared with 226,000 during the first three months of the year.

Since most economists have been forecasting a slower second half of 2012 because of electioneering and a congressional fight over extending expiring tax cuts, there’s little momentum heading into an anticipated rough patch.

“Job growth should pick up in coming months, but I don’t say this with any conviction. Businesses are reluctant to hire, given the still vivid nightmare of the recession and the specter of the European debt crisis and the big decisions the next president will have to make on taxes and government spending,” said Mark Zandi, the chief economist for forecaster Moody’s Analytics. “American businesses are in good financial shape and very competitive, which should shine through with more hiring as these concerns are resolved, hopefully in a reasonably positive way.”

With the nation now gripped by coming presidential and congressional elections, politicians pounced on the dismal report. It took House Speaker John Boehner, R-Ohio, just minutes to issue a statement that threw everything but the kitchen sink at President Barack Obama.

“Today’s report shows the private sector clearly isn’t ‘doing fine’ and that President Obama’s policies have failed. The president bet on a failed ‘stimulus’ spending binge that led to 41 months of unemployment above 8 percent,” Boehner said. “He bet on a government takeover of health care that’s driving up costs and making it harder for small businesses to hire. He even bet taxpayer dollars on companies like Solyndra while blocking popular projects like Keystone XL that would create tens of thousands of new American jobs.”

At a campaign stop, Republican presidential candidate Mitt Romney called the numbers a “kick in the gut” and took a swipe at Obama.

“American families are struggling. There’s a lot of misery in America today, and these numbers understate what people are feeling,” the former Massachusetts governor said, adding that “the president’s policies have not got Americans working again.”

The job of defending the weak numbers fell to Alan Krueger, the head of the White House Council of Economic Advisers.

“The economy has now added private-sector jobs for 28 straight months, for a total of 4.4 million payroll jobs during that period. Employment is growing but it is not growing fast enough, given the jobs deficit caused by the deep recession,” Krueger said in a subdued statement.

The harsh truth for the White House is this: The average of 76,000 jobs over the past three months amounts to about half the 150,000 monthly new jobs that economists think are necessary to take into account new entrants into the workforce and still knock down the jobless rate.

“The good news is that employment growth is not slowing further, but there is no sign of it picking up either. At this pace, job creation is not fast enough to lower the unemployment rate with the labor force growing at close to 150,000 per month on average,” New York forecaster RDQ Economics said in a research note for investors.

June’s weak jobs report surely will spark debate again about whether government statisticians are fully capturing hiring, especially among small businesses. That’s because the ADP National Employment Report released Thursday, a gauge of private-sector hiring taken from payroll managers, showed 176,000 new hires during the same period. Most striking, more than half of those — 93,000 — were at small businesses.

There were a few silver linings in the otherwise forgettable jobs report. Combined private-sector work hours posted their largest gain since February, rising by four-tenths of a percentage point. What that means is employers most likely increased their workers’ hours rather than adding employees.

Within the numbers, the category of temporary help services, often a harbinger of hires in the future, rose by more than 25,000. That suggests employers may be ready to hire when conditions improve.

“In short, for the third straight month there were too few jobs. Unlike the past two months, this was not a complete disaster, as the labor force, hours and wages rose in June,” wrote Douglas Holtz-Eakin, a former director of the Congressional Budget Office who’s the head of the conservative policy group American Action Forum.

JUNE BY THE NUMBERS:

—Retail, down 5,400.

—Government jobs, down 4,000.

—Transportation and warehousing, down 2,200.

—Construction, up 2,000.

—Financial services, up 5,000.

—Manufacturing, up 11,000.

—Health care, up 13,000

—Leisure and hospitality, up 13,000.

—Temporary help services, up 25,200.

—Professional and business services, up 47,000.

©2012 McClatchy Washington Bureau

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