US jobs figures disappoint

US employers hired at a dismal pace in June, raising pressure on the Federal Reserve to do more to boost the economy and further jeopardising president Barack Obama's chances of re-election in November.

The Labor Department said today non-farm payrolls expanded by just 80,000 jobs in June, falling short of forecasts though slightly higher than a revised May reading of 77,000.

Job creation during the month wasn't enough to bring down the country's 8.2 per cent unemployment rate.

The report appeared sure to fuel concerns that Europe's debt crisis is shifting the US economy into low gear.

Mitt Romney, Mr Obama's Republican challenger, is focusing his campaign on the weak jobs market that has dogged Obama's presidency.

The details of the report were also unsettling. The government said the economy created 1,000 fewer jobs during April and May than previously estimated.

The somber report might push the Federal Reserve closer to taking new actions to lower borrowing costs to encourage companies to increase hiring. Analysts polled by Reuters expected an increase in payrolls of 90,000 jobs.

Debt woes have bogged down much of Europe, sending some countries into recession. The euro zone crisis in turn has dulled economic growth around the world from China to Brazil. A survey on Monday found US manufacturing contracted for the first time in nearly three years in June.

Europe is not the only worry weighing on the US outlook. Washington plans enough belt-tightening at the start of 2013 to easily send the economy into recession. Cautious observers wonder if lawmakers can avoid this "fiscal cliff".

Job creation averaged 75,000 per month during the second quarter, compared with an average increase of 226,000 in the first quarter. Part of the slowdown could be because mild weather led companies to boost hiring in the winter at spring's expense.

But recent weakness in everything from retail sales to business sentiment suggests something more fundamental is at play.

"We're not expecting things to take off in the second half of the year," said Sara Klein, an economist at Moody's Analytics in West Chester, Pennsylvania. "Weather wasn't the only factor."

Reuters