Payrolls in U.S. Rose 80,000 in June; Jobless Rate 8.2%
American employers added fewer workers to payrolls than forecast in June and the jobless rate stayed at 8.2 percent as the economic outlook dimmed.
The 80,000 gain in employment followed a 77,000 increase in May, Labor Department figures showed today in Washington. Economists projected a 100,000 rise, according to the median estimate in a Bloomberg News survey. Growth in private payrolls was the weakest in 10 months.
Stocks fell on concern hiring has shifted into a lower gear, restricting consumer spending and leaving the economy more vulnerable to a global slowdown. The figures underscore concern among some Federal Reserve policy makers that growth isn’t fast enough to lower unemployment stuck above 8 percent since February 2009.
“The job market is soft,” said David Resler, chief economic adviser at Nomura Securities International Inc., who correctly forecast the payrolls gain. “I’d characterize our reaction as much the same way the Fed will react -- not surprised but disappointed. It’s just not the kind of growth we need to see at this stage in the business cycle.”
The Standard & Poor’s 500 Index dropped 0.9 percent to 1,354.68 at the close in New York. The yield on the benchmark 10-year Treasury note declined to 1.55 percent from 1.60 percent late yesterday.
“What we are seeing today from an income perspective is our economy is modestly adding jobs,” Robert Hull, chief financial officer at Lowe’s Cos., the second-largest U.S. home- improvement retailer, said at a June 26 consumer conference in Boston. “That’s the good news. The bad news is it’s not sufficient to have a material impact on the unemployment rate.”
Private payrolls increased 84,000 in June after a revised gain of 105,000 that was larger than initially reported. They were projected to advance by 106,000 in June, the survey showed. Last month’s change in private payrolls reflected a 2,000 increase in education and health services that was the smallest in almost two years.
At the same time, an increase in hours worked along with a pickup in wages last month indicate demand may hold up and keep the economy expanding. While companies may put off adding more workers to payrolls because of Europe’s debt crisis, gains in spending may be prompting them to ask their employees to put in a longer workweek.
The unemployment rate, derived from a separate survey of households, was forecast to hold at 8.2 percent, according to the Bloomberg survey median.
The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- increased to 14.9 percent from 14.8 percent.
Among those having trouble finding full-time work is Dave Marshall of Tampa, Florida. The 23-year-old Army reservist, who works part time for two security firms in the area, said he has been unable to find a job that utilizes his degree in sociology from the University of Florida in Gainesville.
“I am getting edged out by people with experience,” Marshall said. “There have been some entry-level positions that I have applied for, but the economy is so bad that the people who have been let go are also applying for entry-level positions and a lot of them have two, three years of experience.”
Nicole Sandler, 52, lost her job at Air America in January 2010 when the radio station closed. She was ineligible for unemployment benefits because she was a contractor.
Sandler moved in with her fiance in Coral Springs, Florida, in April 2011 when she lost her house in Miami. She gets about $1,000 a month from a webcast she puts together five nights a week and takes temporary radio jobs when she can get them.
“I work but I’m still technically unemployed,” said Sandler. “I guess I could try to find a job doing something else, but at 52 to take an entry-level job I may as well do what I’m doing. What am I going to do, work in a supermarket?”
Today’s report deprived President Barack Obama of progress on voters’ overriding concern with just four months before the election.
Republican presidential candidate Mitt Romney called the report “another kick in the gut.”
“The president’s policies have not gotten America working again, and the president is going to have to stand up and take responsibility for it,” Romney said at a hardware store in Wolfeboro, New Hampshire, where he’s vacationing this week.
While Romney has suggested that Obama has done a worse job managing the economy than President Jimmy Carter, investors have given the U.S. a vote of confidence.
The S&P 500 surged 70 percent under Obama through yesterday, more than three times the 19 percent increase during Carter’s first 3-1/2 years in office starting in 1977.
Although unemployment is higher than the 7.5 percent level in May 1980, inflation is lower. Consumer prices rose 1.7 in May from a year earlier, compared with a 14.4 percent increase in May 1980.
Still, joblessness has exceeded 8 percent since February 2009, the longest such stretch since monthly records began in 1948.
Only one president since World War II, Ronald Reagan, has stayed in office with a jobless rate above 6 percent. Reagan won a second term in 1984 with 7.2 percent unemployment in the month of the election; the rate had fallen almost three percentage points in the previous 18 months.
Companies like Staples Inc. aren’t anticipating lower jobless rates anytime soon.
“I don’t think we’re waiting around and holding our breath for that in the retail space,” Michael Miles, chief operating officer at the Framingham, Massachusetts-based office-supply retailer, said at a June 27 investor conference.
Today’s report showed employment at service providers increased 67,000 in June after a 98,000 gain, today’s report showed. Construction companies added 2,000 workers, while retailers cut 5,400 jobs.
Uncertainty about the U.S. government’s fiscal outlook may still be hampering hiring plans. Congress has yet to resolve the so-called fiscal cliff, which represents more than $600 billion in higher taxes and reductions in defense and other government programs in 2013 that will take place without action.
Across the Atlantic, joblessness in the 17-nation euro area rose to 11.1 percent in May, the highest in records that begin in 1995, from 11 percent a month earlier, data showed this week.
“It is pretty clear that a lot of what is slowing the economy down are fears of financial catastrophe and what’s going on in Europe,” Austan Goolsbee, former chairman of the White House Council of Economic Advisers under Obama, said on Bloomberg Television.
Today’s report showed factory payrolls in the U.S. increased by 11,000, more than the survey forecast of a 7,000 increase and following a 9,000 increase in the previous month. Government payrolls decreased by 4,000.
Manufacturing is getting a boost from rising demand for new cars. Auto sales accelerated to a 14.1 million seasonally adjusted annualized rate in June, according to researcher Autodata Corp., completing the best first half since 2008.
“We’re seeing strong demand for our current products as well as our new models,” Bill Krueger, vice chairman of the Americas for Nissan Motor Co., said today in a telephone interview. He said the company will add a shift to its Tennessee plant to meet demand.
In a bright spot for American workers, average hourly earnings rose to $23.50 from $23.44 in the prior month, today’s report showed. The average work week climbed six minutes to 34.5 hours.
The number of temporary workers increased 25,200 in June after an 18,600 rise.
At the Fed, the slowdown in both economic and employment growth prompted officials to take additional steps to stimulate the expansion. The Federal Open Market Committee on June 20 extended Operation Twist to the end of the year. The program aims to push down long-term borrowing costs on everything from mortgages to car loans by extending the maturity of assets on the Fed’s balance sheet.
“This is going to be read as in line with the concern that they expressed about the labor market,” said Roberto Perli, managing director of policy research at International Strategy & Investment Group in Washington, who formerly worked in the Fed’s Division of Monetary Affairs. “It probably doesn’t contain any incremental information that leads them to believe that the situation is worse than they thought.”
At an April 25 press conference, Fed Chairman Ben S. Bernanke said job growth of about 100,000 a month is needed to keep the jobless rate stable, and increases of 150,000 to 200,000 are needed to reduce it.
Policy makers last month also downgraded their outlook for jobs and growth, saying they anticipate the unemployment rate will average 8 percent to 8.2 percent in the fourth quarter of this year versus an April estimate of 7.8 percent to 8 percent.
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