US employment figures cast cloud over hope of labour market bounce
THE US economy added 80,000 jobs in June, while the unemployment rate remained unchanged at 8.2 per cent, dashing hopes that the US labour market might be improving after the recent slump.
The lacklustre pace of job creation, which was virtually the same as it was in May, deals a blow to the Obama administration and the president’s re-election campaign, given his vulnerability to attacks on the weak economy from Republican challenger Mitt Romney.
Some economists had been hoping for a better reading on payroll formation last month, possibly in excess of 100,000 new positions, but yesterday’s labour department data confirms the US economy remains firmly in the midst of a significant slowdown – although still reasonably safe from a double-dip recession.
The sluggish but steady data on payrolls may not be sufficient to push officials at the Federal Reserve towards a new round of quantitative monetary easing, known as QE3.
US stocks opened lower following the report, with the SP 500, Dow Jones Industrial Average and Nasdaq Composite all down less than 1 per cent. US bond prices rose and the yield on benchmark 10-year treasuries fell three basis points to 1.56 per cent.
Gold fell more than 1 per cent as the dollar strengthened. Kathy Bostjancic, director of macroeconomic analysis at the conference board, summed up the disappointment with the report: “There is little hope of an acceleration in the pace of job growth any time soon. These conditions are likely to persist at least through the summer and possibly longer. This economy has no forward momentum and little help from monetary or fiscal policy.” The data confirms the US is still suffering from the euro zone crisis, and the slowdown in growth in key emerging markets. Private payrolls were up by 84,000, slowing from May when they were up by 105,000 new positions.
Employment in construction rose 2,000, compared with a drop of 35,000 in May, while manufacturers added 11,000 jobs, roughly unchanged from 9,000 the previous month. The government sector, a big drag on the labour market, showed a modest improvement, with 4,000 jobs lost compared to 28,000 in May. One silver lining was the increase in hours worked and earnings, which could bode well. – Copyright The Financial Times Limited 2012