U.S. Sheds Jobs


Wall Street Journal

By LUCA DI LEO And TOM BARKLEY

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Associated PressJob seekers lined up June 28 for an employment fair in San Francisco.

WASHINGTON — The U.S. economy shed jobs in June for the first time this year and the unemployment rate remained high, moves that will likely add to concerns that the pace of the recovery could slow in the second half.

Nonfarm payrolls fell by 125,000 last month, as 225,000 government workers that were hired for the 2010 census in recent months lost their temporary jobs, the U.S. Labor Department said Friday. Only 83,000 private-sector jobs were added last month.

In May, nonfarm payrolls had surged by 433,000, boosted by the census hiring. The May figure was revised slightly from a previously reported 431,000 increase.

Economists polled by Dow Jones Newswires were expecting payrolls to drop by a more modest 110,000 in June.

Taking into account revisions to prior months, the U.S. economy added an average of around 150,000 jobs a month in the first, a level that’s still not strong enough to bring unemployment down significantly.

The jobless rate, which is calculated using a separate household survey, edged down to 9.5% in June from 9.7% the previous month. Economists were expecting it to edge up to 9.8%.

“We need unprecedented rates of growth to get out of this hole in a reasonable amount of time,” Jesse Rothstein, chief economist at the Department of Labor, said in an interview ahead of the release. “It’s hard to overstate how deep the hole is.”

That’s unlikely to happen any time soon. Economic figures out Thursday pointed to a broad economic slowdown in the U.S., from less manufacturing growth to elevated claims for jobless benefits and declines in home construction and pending sales. The latest figures should reinforce the Federal Reserve’s view that short-term interest rates need to stay close to zero to lift the economy.

The private-sector jobs gains of 83,000 were less than the 110,000 that were expected and followed a small 33,000 increase in May.

Within professional and business services, employment continued to increase in temporary help services, which added 21,000 jobs. Manufacturing jobs continued to trend up, rising by 9,000, but the increase was much slower than in previous months. Construction, a sector of the economy that is still suffering, lost 22,000 jobs in June.

Total government employment fell by 208,000, hurt by the laying off of 225,000 Census workers and by state and local government budget strains.

There are increasing concerns that growth may slow in the second half of the year. U.S. consumer confidence fell sharply in June, wiping out the gains posted in the previous two months as Americans worried about their job prospects. Two senior Fed officials Wednesday gave a dim view of the U.S. economy, saying it isn’t yet strong enough to warrant interest-rate increases and that credit growth is likely to be restrained for years.

In a sign of the labor market’s continued weakness, the Friday’s report showed 46% of unemployed Americans were out of work for more than six months in June. The longer someone is without a job, the harder it is to find work. With time, people lose skills — and employers are often loathe to hire someone who hasn’t been working for long periods.

Indicating there’s still a lot of slack in the U.S. jobs market and that inflation pressures remain contained, the report also showed that average hourly earnings of all employees dropped by $0.02 to $22.53 in June.

Write to Luca Di Leo at luca.dileo@dowjones.com and Tom Barkley at tom.barkley@dowjones.com

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