80,000 Jobs Created in June

CREATED Jul. 6, 2012

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The nation crawled into its third consecutive month of disappointing job creation in June, which was too dismal to dent the unemployment rate, which was stuck at 8.2%.

"Job creation has effectively taken the early summer off," said Brian Jacobsen, an economist at Wells Fargo Funds Management in Menomonee Falls.

At a time when the nation consistently needs at least 200,000 new jobs each month just to begin moving the millions of leftover long-term unemployed into jobs, the private sector last month added a meager 84,000, according to estimates released Friday from the U.S. Bureau of Labor Statistics. That's well below expectations of at least 90,000.

Cumulatively, private-sector job creation over the last three months doesn't even add up to the 277,000 created in the month of January. The economy, however, has slowed progressively since the start of the year. For the April-June quarter, private-sector employers added an average of 91,000 per month, well below the 226,000 jobs added on average each month in the first three months.

The government sector - which spans every agency of the public sector from local schools to federal bureaucrats - lost an estimated 4,000 jobs, which is far fewer than last year, when the government sector routinely lost tens of thousands of jobs a month. The erosion of government jobs and the anemic change in private jobs left the nation with a net increase of only 80,000 new non-farm jobs in June - well below expectations of at least 90,000, which economists already had lowered in recent days.

It's clear that the economy remains fragile three years after the recession ended.

The latest warning on the cooling in the global economy came earlier Friday from the head of the International Monetary Fund.

"Over the past few months, the outlook has regrettably become more worrisome," IMF managing director Christine Lagarde said in a statement. "Many indicators of economic activity - investment, employment, manufacturing - have deteriorated. And not just in Europe or the United States."

In the run-up to the jobs report, actions spoke louder than words for some of the world's major central banks. On the day before the jobs reports, the powerful reserve banks of China, Europe and Britain acted virtually in unison to lubricate their economies with announcements of easier credit.

Similarly in the U.S., economists routinely now expect some new form of economic relief from the Federal Reserve.

"Numerous factors are contributing to an unstable macroeconomic environment in which the labor market now struggles to gain traction," said Abdur Chowdhury, chairman of the economics department at Marquette University.

Europe's debt crisis is weighing on American exports, which has slowed growth at U.S. factories. And the scheduled expiration of several big tax cuts at the end of this year has increased uncertainty for many U.S. companies, making many hesitant to hire.

"At home, there is little help coming from the government side, which has its own fiscal challenges," Chowdhury said. "Unfortunately, with an election just months away and ideological battle lines drawn, there's little chance that policy uncertainty will soon recede."

As Friday's unemployment report shows, there are still 12.7 million people classified as officially unemployed, with over two-fifths of them being unemployed for six months or longer. Those numbers, however, don't include the 8.2 million who can find only part-time pay even though they need full-time income. Nor does it include the 2.5 million additional working-age Americans who cannot find a job at all and gave up looking.

Of the lackluster growth in June, nearly all came from the professional, business services and temporary jobs sectors. About one-third of the jobs gained in June were in temporary services.

Employment in manufacturing edged up by an estimated 11,000 in June. That's been the average rate throughout the second quarter in the factory sector, well below an average of 41,000 per month during the first quarter.

The stock market opened sharply lower. The Dow Jones industrial average dropped 146 points in the first hour of trading, and the Standard & Poor's 500 index fell 15 points, or 1.1%.

Money flowed into government bonds, perceived by investors as safer. The yield on the benchmark 10-year U.S. Treasury note, which moves in the opposite direction from its price, fell to 1.55%, from 1.59% on Thursday.

A weaker job market has made consumers less confident. They have pulled back on spending, even though gas prices have plunged since early spring.

High unemployment could shift momentum to Mitt Romney, the presumptive GOP presidential nominee. An Associated Press-GfK poll released last month found that more than half of those surveyed disapproved of President Barack Obama's handling of the economy.

Obama is expected to face voters with the highest unemployment rate of any president since the Great Depression, and the economy is the top issue for many voters.

The Associated Press contributed to this report.