WASHINGTON DC: US employers hired at a dismal pace in June, raising pressure on the Federal Reserve to do more to boost the economy. The Labour Department said that non-farm payrolls grew by just 80,000 jobs in June, the third straight month below 100,000.
Job creation was too weak to bring down the country’s 8.2 per cent jobless rate and the report fuelled concerns that Europe’s debt crisis was shifting the US economy into low gear. “We’re just crawling forward here,” said Nigel Gault, an economist at IHS Global Insight in Lexington, Massachusetts.
While Obama holds a narrow lead in most national polls, many voters are critical of his handling of the economy. At a campaign rally, Obama said the pace of job creation needs to pick up. “It’s still tough out there,” he said.
Mitt Romney, Obama’s Republican challenger, assailed the president for not doing enough to get people back to work.
US stocks closed about one per cent lower, while yields on US government debt fell on bets the Fed would launch a new round of bond purchases to lower borrowing costs and spur hiring. The dollar fell against the yen, but rose against the euro as investors sought a safe haven.
Hiring strikeLast month, the Fed extended a programme aimed at keeping long-term interest rates down and said it was
prepared to do more to spur the economic recovery if needed.
The sombre jobs report could move the central bank closer to a third round of so-called quantitative easing, or QE3. Reuters polled 16 primary dealers — the large financial institutions that do business with the Fed — and found 12 expect QE3 by year-end, with eight
expecting it either at the Fed’s next meeting, which wraps up on August 1, or its sub-sequent gathering in September. “You could see something as early as next month,” said Brian Levitt, an economist at Oppenheimer Funds in New York.
Economists estimate roughly 125,000 jobs are needed each month just to hold the jobless rate steady. During the second quarter, job
creation averaged 75,000 per month, down from an average of 226,000 in the first quarter.
Part of the slowdown could be because mild weather led companies to boost hiring during the winter at spring’s expense. But weakness in everything from factory activity to retail sales suggests something more fundamental is at play and the jobs data buttressed
In June, factories added 11,000 workers and construction employment edged up 2,000, the first gain since January and further evidence the long-depressed housing market is steadying. However, hiring slowed sharply in the services industry, with retailers cutting 5,400 workers. Overall, private-sector hiring was the weakest since August.
Uncertain and unstable Debt woes have bogged down much of Europe, sending some countries into recession. The crisis in turn has dulled
economic growth around the world and central banks in China, the Euro Zone and Britain all eased monetary policy on Thursday. Europe is not the only weight on the US outlook. Washington plans enough belt-tightening at the start of 2013 to easily send the economy into recession if Congress and the White House cannot find a way to avoid this.
Until recently, the United States had been a relatively bright spot in the global economy, especially in manufacturing, and most economists still expect lack-lustre growth over the rest of 2012 rather than a slip toward recession.
Although jobs growth in June fell short of economists’ already subdued expectations for a 90,000 gain, the report did offer some hopeful signs. Average hourly earnings rose six cents, the biggest increase in four months.
In addition, a measure of total hours worked hit its highest level since November 2008, suggesting business is brisk enough for employers to demand more from workers, even as they hold the line on hiring.
Temporary employment rose the most in four months. “That has to do with the uncertainty that everyone’s feeling,” said Joanie Ruge, an analyst at temporary staffing company, Randstad Holdings US, adding, “Employers are not feeling like things are stable.”