by Luca Di Leo and Jeff Bater, The Wall Street Journal
The U.S. economy barely added jobs for the second month in a row in June and the unemployment rate rose to the highest level this year, adding to concerns the labor market will take years to recover.
Nonfarm payrolls rose 18,000 last month, far less than expected, as small gains in the private sector were just enough to outweigh continued government-job losses, the Labor Department said Friday in its survey of employers. Payrolls data for the previous two months were revised down by a total 44,000 to show increases of only 25,000 jobs in May and 217,000 in April.
The jobless rate, which is obtained from a separate household survey, increased for the third straight month to 9.2% in June, from 9.1% in May. It was the highest level since December 2010. There are 14.1 million Americans who would like to work but can't get a job.
Economists surveyed by Dow Jones Newswires had forecast payrolls would rise by 125,000 and the jobless rate would remain steady at 9.1%.
The choppy two-year-old recovery is proving to be one of the worst since the 1930s. It has been far too slow to make up for all the jobs lost after the financial crisis of 2008 and 2009. With little scope left for policy to help, President Barack Obama is likely to confront the highest unemployment rate of any postwar incumbent when he seeks reelection in the fall of 2012.
Friday's report showed private-sector employers, which account for about 70% of the workforce, added only 57,000 jobs in June, down from 73,000 in May. The weakness was broad-based.
Manufacturing employment remained weak, adding only 6,000 jobs. Economists were expecting a bounce back as disruptions to manufacturing production stemming from Japan's earthquake should be easing by now. Employment in the battered construction sector was broadly unchanged. The housing sector remains a big drag on the economy.
Employment in professional and business services, which had shown strong gains in previous months, rose by only 12,000.
Government employment fell by 39,000, the eighth drop in a row, following declines in all levels of government struggling to close budget gaps.
After all the money spent fighting the crisis, policymakers have few tools left to stimulate the economy. President Obama is focused on cutting a huge budget deficit. The Federal Reserve, which sees unemployment around 8.0% at the end of 2012, has already cut interest rates close to zero and is reluctant to purchase more government bonds now that inflation is rising.
Americans' incomes, which are crucial to fuel the spending needed to boost the economy, edged lower. Average hourly earnings of all employees fell $0.01 to $22.99. Over the past year, earnings have increased by only 1.9%.
Link to full article in Wall Street Journal.
