Jobs report is uniformly grim

by
July 9, 2011

NEIL IRWIN , Washington Post

WASHINGTON – Job growth came nearly to a halt in June, according to surprisingly grim data released on Friday that raise doubts that the economy will bounce back from its spring lull any time soon.

Midway through a year that began with expectations that this would finally be the time for the ailing U.S. economy to take off, the nation is stuck in a muddle, growing too slowly to keep the jobless rate from rising, let alone to put some of the 14 million people looking for work back to earning paychecks. The odds that job creation will take off in the remainder of the year are looking slimmer with every new piece of data.

The 18,000 jobs that U.S. employers added to their payrolls in June was less than a fifth of what economist had expected — and far below the 125,000 or so jobs needed to keep up with an ever-growing population. The unemployment rate, as a result, rose to 9.2 percent from 9.1 percent.

“This does throw a lot of cold water on the idea that we’ll get a quick rebound,” said Michael Hanson, a senior economist at Bank of America-Merrill Lynch.

The jobs survey was exceptionally bleak in its details. Job growth in April and May was revised downward by a combined 44,000 positions. Temporary employers, often a leading indicator of future activity in the labor market, cut 12,000 jobs. Roughly 272,000 Americans dropped out of the labor force, perhaps out of frustration with their job prospects. The unemployment rate would have risen even higher had they continued their job hunts.

A broader measure of unemployment that includes those who have given up looking for jobs out of frustration and those with part-time work who want a full-time job rose to 16.2 percent, from 15.8 percent.

Financial markets dropped in response to the weaker data. Money flooded into U.S. Treasury bonds, viewed as a safe port in a storm.

It was, “all in all, an employment report with no redeeming features whatsoever,” said Barclays Capital economist Peter Newland. “Employment, unemployment, hours and wages all disappointed.”

Economist Heidi Shierholz of the Economic Policy Institute described the situation as “a remarkable, across-the-board backslide.”

The weak reading on the job market perhaps shouldn’t come as a complete shock. For the first six months of 2011, the nation averaged 126,000 new jobs created per month, which is just about what one would expect with the soft 2 percent growth in economic activity over that period.

At the same time, there had been some recent signs that a spring slowdown in the economy was a mere soft patch. The report throws cold water on the idea, embraced by many economists, that the economy was held back by temporary factors — such as higher oil prices and the Japanese tsunami-earthquake — in the first few months of 2011 and was poised for a burst of growth as those problems ease.

To read more, visit: http://www.startribune.com/business/125250349.html

 

 

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