Streak of job gains ends in June

Hir­ing in pri­vate sec­tor rises, but job­less rate falls as thou­sands halt their search for work

Austin American-Statesman - - BUSINESS - FROM WIRE RE­PORTS

The phas­ing out of 225,000 tem­po­rary cen­sus work­ers left to­tal U.S. pay­rolls down by 125,000 jobs in June, but the pri­vate sec­tor ex­panded by 83,000 jobs and the nation’s un­em­ploy­ment rate dropped to 9.5 per­cent, the low­est level since last July, the Bureau of La­bor Statis­tics re­ported Fri­day.

Al­though the cen­sus cut­back led to the first monthly re­duc­tion in to­tal U.S. jobs in six months, the ex­pan­sion of pri­vate-sec­tor em­ploy­ment con­tin­ued for a sixth con­sec­u­tive month.

“We are headed in the right di­rec­tion, but … we’re not headed there fast enough,” Pres­i­dent Barack Obama said Fri­day.

The cen­sus-based drop in jobs was ex­pected. What was sur­pris­ing was the un­em­ploy­ment rate fall­ing to 9.5 per­cent, a re­duc­tion of 0.2 per­cent­age point from May and of 0.6 per­cent­age point from last year’s high.

How­ever, the de­cline in the over­all un­em­ploy­ment rate is less pos­i­tive than it ap­pears. The num­ber of peo­ple who de­scribed them­selves as em­ployed ac­tu­ally fell by 301,000. But many more peo­ple — 652,000 — counted them­selves as no longer be­ing in the la­bor force at all, pos­si­bly out of frus­tra­tion, push­ing the un­em­ploy­ment rate down.

Com­bined with other re­cent data, the num­bers in­di­cate that the econ­omy is mud­dling through a pe­riod in which job growth is weak and nearly 15 mil­lion peo­ple are out of work. There is lit­tle ev­i­dence that a dip back into re­ces­sion has be­gun, but the odds have risen that

Con­tin­ued from pre­vi­ous page growth in the sec­ond half of the year will be too weak to cre­ate mean­ing­ful im­prove­ment in the job mar­ket.

“The chances of a dou­ble dip are still fairly low, but the chances of slug­gish growth are quite high,” said Na­ri­man Behravesh, chief econ­o­mist at the fore­cast­ing firm IHS Global In­sight. “It’s en­tirely pos­si­ble that this is as low as un­em­ploy­ment will get for quite a while.”

In re­cent weeks, ev­ery pil­lar of the eco­nomic re­cov­ery that started a year ago has shown signs of weak­en­ing. Man­u­fac­tur­ers had been crank­ing up pro­duc­tion but now have largely com­pleted re­build­ing in­ven­to­ries and are ex­pand­ing more slowly. The hous­ing mar­ket was re­cov­er­ing as well — un­til the end of a home­buyer tax credit this spring. Con­sumer con­fi­dence plum­meted in June.

“Peo­ple are still re­ally cau­tious, and we haven’t seen small busi­nesses en­gage in any sub­stan­tial way,” said Roy Krause, chief ex­ecu- tive of SFN Group, a large em­ploy­ment ser­vices com­pany.

Over­all, em­ploy­ers shed 125,000 jobs in June; how­ever, that fig­ure was dis­torted by the Cen­sus Bureau cut­ting 225,000 tem­po­rary jobs. About 100,000 jobs must be cre­ated ev­ery month just to keep up with growth in the la­bor force.

The av­er­age work­week shrank to 34.1 hours from 34.2, and av­er­age hourly earn­ings at pri­vate em­ploy­ers fell by 2 cents to $22.53.

Job cre­ation was strong­est in the pro­fes­sional and busi­ness ser­vices sec­tor, which added 46,000 po­si­tions, though nearly half of those were in the tem­po­rary-ser­vices field. Other sec­tors to add large num­ber of jobs were leisure and hos­pi­tal­ity, which added 37,000, and ed­u­ca­tion and health care, which to­gether added 22,000.

Sec­tors that slashed jobs in­cluded con­struc­tion, which cut 22,000 po­si­tions; fi­nan­cial ac­tiv­i­ties, which shed 15,000 jobs; and state and lo­cal gov­ern­ments, which cut 8,000 po­si­tions.

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