Fewer Jobs Added In June

New Data Suggest Slower Growth, Analysts Say

U.S. employers slowed the pace of hiring last month, the government reported yesterday, adding to signs that the economy cooled slightly in the spring.

The nation's payrolls grew by a modest 112,000 jobs in June, a smaller gain than the 235,000 added in May, the Labor Department reported. The economy has added jobs every month since August, but the size of the monthly increase peaked in March and has declined in each of the three months since.

The gains in April and May also were smaller, by a combined 35,000 jobs, than previously reported, according to revisions of the department's earlier figures.

The unemployment rate, meanwhile, held steady at 5.6 percent in June, for the third consecutive month, as the number of additional people seeking jobs roughly matched the additional number who found jobs.

Those and other details in the report show that employers scaled back their hiring as the economy lost some momentum in recent months, analysts said.

"When businesses get a sense that the underlying growth rate is weakening, they're going to cut back on hiring," said Peter E. Kretzmer, senior economist with Bank of America Corp., who largely blamed the spring increase in energy prices for eating into consumers' and businesses' spending power.

Stock prices fell slightly yesterday. But bond prices rose as financial analysts concluded that milder job growth will mean the Federal Reserve can stick to its plan of raising its benchmark short-term interest rate in small, gradual steps in the months ahead.

With the presidential election four months away, both major campaigns found ammunition in the mixed employment picture.

President Bush said the job gains were further evidence that his tax cuts have succeeded in strengthening the economy and the labor market.

"We're witnessing steady growth," Bush told a group of small-business owners at the White House, according to a transcript. "We don't need boom or bust type growth, 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."