The 18,000 jobs U.S. employers added to their payrolls in June was less than a fifth of what economists had expected and far below the 125,000 or so needed to keep up with an ever-growing population. The unemployment rate rose to 9.2 percent from 9.1 percent.
“This does throw a lot of cold water on the idea that we’ll get a quick rebound,” said Michael Hanson, a senior economist at Bank of America Merrill Lynch.
The jobs survey was exceptionally bleak even in its details. Job growth in April and May was revised downward by a combined 44,000 positions. Temporary employers, often a leading indicator of future activity in the labor market, cut 12,000 jobs. And roughly 272,000 Americans dropped out of the labor force, perhaps out of frustration with their job prospects. The unemployment rate would have risen even higher had they continued their job hunts.
A broader measure of unemployment — including those who have given up looking for jobs out of frustration and those with part-time work who want a full-time job — rose to 16.2 percent from 15.8 percent.
Financial markets dropped in response to the weaker data, with the Standard & Poor’s 500-stock index down 0.7 percent Friday. Money flooded into U.S. Treasury bonds, viewed as a safe port in a storm, with the interest rate the federal government must pay to borrow money for a decade dropping to 3.02 percent from 3.14 percent.
It was, “all in all, an employment report with no redeeming features whatsoever,” Barclays Capital economist Peter Newland said in a research note. “Employment, unemployment, hours and wages all disappointed.”
On one hand, the weak reading on the job market should not come as a complete shock. For the first six months of 2011, the nation averaged 126,000 new jobs created per month, which is just about what one would expect with the 2 percent growth in economic activity over that period.
At the same time, there had been some recent signs that a spring slowdown in the economy was a mere soft patch. The report throws cold water on the idea, embraced by many economists, that the economy was held back by temporary factors in the first few months of 2011 — such as higher oil prices and the Japan earthquake — and was poised for a burst of growth as problems eased.
The weak numbers put pressure on policymakers in Washington to find solutions to the jobs problem — at a time when they are more polarized than ever about what those solutions would look like. The Obama administration used the occasion to plea for long-standing priorities, including extending a temporary reduction in payroll taxes, passing trade deals with South Korea and other nations, and investing in transportation and other infrastructure.