Employers in the U.S. hired fewer workers than forecast in June, showing the labor market is making scant progress toward reducing joblessness.
Payrolls rose 80,000 last moth after a 77,000 increase in May, Labor Department figures showed today in Washington. Economists projected a 100,000 gain, according to the median estimate in a Bloomberg News survey. The unemployment rate held at 8.2 percent. Private employment, which excludes government agencies, increased 84,000 in June, the weakest in 10 months.
Stock-index futures extended losses as the figures indicated hiring has shifted into a lower gear, restricting consumers’ ability to boost spending as concern mounts about a global slowdown. Elevated joblessness underscores concern by some Federal Reserve policy makers that the economy isn’t expanding enough.
“The job market is soft as is the overall the economy,” said David Resler, chief economic adviser at Nomura Securities International Inc., who correctly forecast the jobs 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 contract on the Standard & Poor’s 500 Index expiring in September fell 0.4 percent to 1,367.58 at 8:53 a.m. in New York. The yield on the benchmark 10-year Treasury note dropped to 1.55 percent from 1.60 percent late yesterday.
Estimates for total payrolls from the 84 economists surveyed ranged from increases of 35,000 to 165,000 after a previously reported 69,000 gain in May.
Revisions to prior reports subtracted a total of 1,000 jobs to payrolls in the prior two months.
Private payrolls, which exclude government agencies, climbed 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.
June concluded the worst quarter for corporate hiring since the first three months of 2010. 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.
The unemployment rate, derived from a separate survey of households, was forecast to hold at 8.2 percent, according to the Bloomberg survey median. Estimates ranged from 8 percent to 8.3 percent. Joblessness has exceeded 8 percent since February 2009, the longest such stretch since monthly records began in 1948.
Factory payrolls increased by 11,000, more than the survey forecast of a 7,000 increase and following a 9,000 increase in the previous month.
Employment at service-providers added 67,000 workers after 98,000. Construction companies added 2,000 workers and retailers cut 5,400 jobs.
Government payrolls decreased by 4,000.
Average hourly earnings rose to $23.50 from $23.44 in the prior month, today’s report showed.
The average work week for all workers climbed minutes to 34.5 hours, from 34.4 hours the prior month.
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.
The number of temporary workers increased 25,200 in June after an 18,600 rise.
Dave Marshall of Tampa, Florida, has had difficulty finding full-time employment. The 23-year-old member of the Army Reserve, who works part time for two security firms in the Tampa 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.”
The economic and jobs outlook will play a major role in President Barack Obama’s bid for re-election. 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.
“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.”
At the Fed, the slowdown in both economic and employment growth prompted officials to take additional steps to stimulate the expansion last month. The central bankers said on June 20 they would buy securities to extend the maturities of assets on the bank’s balance sheet, thereby holding down longer-term interest rates.
They also lifted forecasts for joblessness, 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.
“After a brighter start to the year, economic momentum has slowed in the last few months,” Federal Reserve Bank of New York President William C. Dudley said during a June 29 speech.
Repeating language the policy makers used when announcing the new measures, Dudley said the Fed is “prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions.” The crisis in Europe and uncertainty over U.S. fiscal policy remain potential hurdles for business investment, he said.
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.
Uncertainty in U.S. about the 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.