July 22, 2024

Job Growth Falters Badly, Clouding Hope for Recovery

With all levels of government laying off workers, the Labor Department reported that employers eked out just 18,000 new nonfarm payroll jobs in June. The already low number created in May was also revised downward to a dismally small 25,000 new jobs, less than half of what was originally reported last month.

Although the government’s survey of employers showed them adding jobs, a separate survey of households showed that more people were out of work than in the previous month, causing the unemployment rate to rise to 9.2 percent.

Economists were stunned since they had been expecting June to show stronger job creation as oil prices eased and supply disruptions receded in the aftermath of the Japanese tsunami and earthquake. Instead, the government’s monthly snapshot of the labor market showed that several sectors, including construction, finance and temporary services, actually shed workers. At the same time, leading indicators like wages and the length of the average workweek, which tend to grow before employers begin adding more jobs, actually contracted.

“Even the wild-eyed optimists out there have nothing to grasp onto in this report except to say, ‘Ah, this too shall pass,’ ” said Joshua Shapiro, chief United States economist at MFR Inc.

Most analysts are not yet forecasting an outright slide back into recession, but at a time when President Obama and Congress are focusing on spending cuts, Europe is in financial crisis and even China’s growth is slowing, there is little expectation of anything other than a prolonged slog for the United States economy.

“Stimulus is fading, and we still have plenty of problems left over from the popping of the bubble,” said Mr. Shapiro. “So it’s going to be a touch-and-go, or a very sub-par, situation for a very long time. The question is a matter of degree in terms of how soft or sub-par it’s going to be, as opposed to whether it’s going to remain that way.”

In remarks in the Rose Garden at the White House on Friday, President Obama went beyond his usual remarks counseling patience on the economy’s long return to health and urged Congress to extend the payroll tax cut passed last December. He also said that legislators should sign pending trade agreements and pass bills that would establish an infrastructure bank and reform the patent process, all measures that he said would help create jobs.

“There are bills and trade agreements before Congress right now that could get all these ideas moving,” President Obama said. “All of them have bipartisan support. All of them could pass immediately, and I urge Congress not to wait.”

Republicans blamed the president and congressional Democrats for the weak job market, with Speaker of the House John Boehner saying that ending the ban on drilling for oil and lifting regulations would spur hiring.

In June, virtually all the job growth came from private companies, which added 57,000 jobs, a striking retrenchment from the average of more than 200,000 jobs a month between February and April. The largest gains came from health care and leisure and hospitality, while manufacturing, which lost jobs in May, was able to add just 6,000 slots in June.

The economy needs to add at least 150,000 jobs a month just to keep up with normal population growth. The protracted stretch of weak-to-moderate job creation over the last two years has left many of the people who lost jobs during the recession increasingly desperate. There are now 14.1 million unemployed, with 6.3 million of them having searched for work for six months or longer. Including those who are working part-time because they can’t find full-time work and those who have stopped looking, the broader unemployment rate is now 16.2 percent, its highest level since December 2010.

Christine Hauser contributed reporting.

Article source: http://www.nytimes.com/2011/07/09/business/economy/job-growth-falters-badly-clouding-hope-for-recovery.html?partner=rss&emc=rss

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