The disappointing data came as Europe’s financial crisis continued to worsen. The European Union said Friday the unemployment rate in the 17-country euro zone rose to 11 percent in April. Meanwhile, a key measure of
China’s manufacturing sector showed it contracted in May.
“There’s no escaping the fact that just about everywhere you look there’s a slowdown in global growth,” said Dan North, North American chief economist for credit insurance firm Euler Hermes.
That became clear as stock markets across the world fell on Friday. The Dow Jones industrial average erased its gains for the year, plummeting more than 2 percent. German markets dropped more than 3 percent, while Japan saw a 1 percent decline. The price of a barrel of Brent-grade crude oil traded in London fell more than 3 percent to dip below $100 for the first time since October.
The fear that the world’s biggest economies are headed toward a simultaneous slowdown drove investors to seek out the safest haven possible: 10-year U.S. Treasuries. Demand for these bonds pushed yields to a record low of 1.45 percent on Friday — even lower than during the 2008 financial crisis. Meanwhile, the price of gold, another safe harbor, jumped 3.7 percent to more than $1,600 an ounce.
“We’re essentially being held hostage to all these very real, very serious downside risks,” said
Bernard Baumohl, chief global economist for the Economic Outlook Group. “No one quite knows how any of these risks are going to play out.”
The weak jobs report also reverberated through the political arena, where the economy has become the foremost issue in the U.S. presidential campaign. GOP candidate Mitt Romney minced no words in criticizing President Obama’s handling of the recovery, calling the data “devastating news.”
“The president’s re-election slogan may be ‘forward,’ but it seems like we’ve been moving backward,” Romney said in a statement.
Speaking in Minnesota, Obama pointed out that the country is still adding jobs but acknowledged that ramping up the pace of growth was challenging. He pointed to elevated gas prices that have chipped away at Americans’ budgets and said the European fiscal crisis is casting a “shadow” over the U.S. economy.
“We knew the road to recovery would not be easy,” he said. “We knew it would take time.”
Economists had hoped that lackluster job numbers in recent months were merely a statistical fluke caused by unseasonably warm winter weather that prompted businesses to hire people earlier than usual. But Friday’s data suggested something more fundamental: Job growth is at its weakest level since last May, when the economy fell into a slump that lasted through the summer.