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US jobs growth slows down Original Source Link: (May no longer be active)
http://www.forbes.com/business/services/feeds/ap/2004/07/02/ap1443632.htmlhttp://www.forbes.com/business/services/feeds/ap/2004/07/02/ap1443632.html
Associated Press
U.S. Job Growth Slows Down in June
07.02.2004, 03:58 PM
The economy created just 112,000 jobs in June, slowing from the torrid pace of the previous three months and raising new misgivings about the strength and endurance of the rebounding jobs market.
The unemployment rate remained at 5.6 percent for a third consecutive month, the Labor Department reported Friday.
President Bush, defending his economic policies as he seeks a second term, told a White House audience that steady growth is the key: "We don't need a boom-or-bust type growth."
June was the 10th straight month of payroll gains, a string that has restored about 1.5 million jobs to U.S. payrolls and shrinking overall losses on Bush's watch to nearly 1.1 million.
But Friday's report provided a mixed picture of the labor market as the presidential nominating conventions near and debate intensifies between Bush and Democratic challenger John Kerry.
Job growth was far less than the 250,000 that economists had expected. Big gains in April and May also were revised downward by 35,000.
"I'm not ready to panic," said Joel Naroff, president of Naroff Economic Advisors in Holland, Pa. "But clearly the job market is not as strong as we initially thought."
More than 900,000 jobs were added in the previous three months, buoying expectations for sizable growth in June. Instead, "the labor market stumbled," said Bill Cheney, chief economist at MFC Global Investment Management.
"This report paints a distinctly weaker picture than we've seen over the past few months and was decidedly weaker than we expected," he said.
An invigorated labor market is what prompted the Federal Reserve to raise interest rates Wednesday for the first time in four years. The quarter-point increase was the first change since the funds rate was cut to a 46-year low of 1 percent in June 2003.
Economists said the weak jobs report should keep the central bank on its measured pace of rate increases, with expectations for a quarter-point hike in August instead of a half point.
A four-month hiring spree in manufacturing ended last month. Factories cut 11,000 jobs in June after expanding payrolls by 75,000 this year, coming off three years of layoffs.
In a separate report Friday, the Commerce Department said factories experienced decreases in orders in May for the second month in a row as demand for cars and other big-ticket goods declined.
The 0.3 percent drop in orders placed with U.S. factories came after a larger 1.1 percent decline in April, the department said.
"We're witnessing steady growth, and that's important," Bush told business executives at the White House. "We want just steady consistent growth so that our fellow citizens will be able to find a job and so that the small-business sector will feel confident about expanding."
But Democrats and their allies had a different take. "Today's employment report confirms what many Americans feel: The jobs market simply isn't as good as the Bush administration would like us to believe," said AFL-CIO President John Sweeney.
Analysts say June's pace of job creation probably will accelerate, but it isn't likely to match the strength of the previous three months. More realistic is job creation of about 200,000 per month.
"The economy this summer may be a little cooler than we thought it was going to be," said David Wyss, chief economist at Standard & Poor's in New York.
The unemployment rate, holding at 5.6 percent this year except for March, when it ticked up to 5.7 percent, should start falling gradually in coming months. For black workers, the jobless rate climbed to 10.1 percent in June, up from 9.9 percent in May. The rate for Hispanics fell to 6.7 percent last month from 7 percent in May.
One month of weak jobs data doesn't specifically signal trouble, economists said. June can be a difficult month to measure jobs because school ends for the summer and seasonal positions start.
"It's too early to say there's reason for concern," said Gary Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis. "The important thing is we are creating jobs."
Jobs were added last month in health care, social services, education, retail, hospitality and transportation. Employment in business services also grew, fueled by temporary employment firms. That category has added 306,000 new jobs since April 2003, providing some ammunition to Democrats and others that claim the recent surge in hiring occurred in lower-wage industries that provide no health care and few other benefits.
Some economists agree. The economy is producing a higher share of jobs that pay less than the national average - 60 percent, compared to the jobs recovery in 1993, when about 54 percent could be considered lower-wage, said Sung Won Sohn, chief economist at Wells Fargo & Co. in Minneapolis.
Also last month, hiring was flat at construction companies and fell in government.
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