U.S. job growth nearly stalled last month, the government reported yesterday, reinforcing other signs that the economic recovery lost steam this summer, just months before the presidential election.
Employers added 32,000 workers to their payrolls in July, seasonally adjusted, the smallest monthly gain since December and the fourth consecutive month in which the pace of job growth has slowed, the Labor Department reported. Hiring also was weaker in May and June than previously thought, according to the department's revisions of earlier figures.
Democratic presidential candidate Sen. John F. Kerry (Mass.), shown visiting a Missouri family yesterday, used the job numbers as a chance to say his administration "could make it better."
(Laura Rauch -- AP)
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Video: Washington Post staff writer Nell Henderson discusses the latest unemployment report.
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Bush Campaign: Gary Blank, economic adviser for the Bush-Cheney campaign, offered the GOP ticket's take on the latest economic data. (Aug. 6).
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Kerry Campaign: Jason Furman, economic adviser for the Kerry-Edwards campaign, gave the Democrats' take (Aug. 6).
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The unemployment rate edged down to 5.5 percent in July from 5.6 percent the month before, as more people did find work.
Stock prices plunged, with all three major stock indicators hitting lows for the year, as many investors saw the job figures as a sign the economy may continue to cool. The report provided new fodder for the campaign debate over the effectiveness of President Bush's economic policies, while complicating the task of Federal Reserve officials who meet Tuesday to set interest rate policy.
"We have slowed down dramatically," said Stuart G. Hoffman, chief economist for PNC Financial Services Group.
The job figures reflect employers' hesitance to add to their payrolls in July after economic growth slowed sharply in the spring -- to its weakest pace in more than a year -- dragged down by higher oil prices, rising interest rates and weak consumer spending, analysts said.
Until recently, many economists -- including those at the Fed -- thought the spring softness would turn out to be a blip and growth would pick up in the second half of the year. But those forecasts assumed that oil prices would continue falling from the highs reached in May. Instead, oil prices have hit new highs in recent days. Although analysts generally do not see the economy slipping back into recession, several have lowered their expectations for the second half of the year, saying the pace of growth is likely to depend in large part on what happens to oil prices.
"If oil stays here [around $44 a barrel] or goes higher, I have fears . . . about the economy growing," Hoffman said. "If it comes down, I think we will be okay."
"For now, we are willing to give the Fed the benefit of the doubt and accept their view that economic growth and employment will rebound later this summer," Joseph Abate of Lehman Brothers Inc. wrote in an analysis for clients. "But we are getting nervous."
The department's revisions sliced 61,000 jobs off the earlier totals for May and June. That means the economy added an average of 106,000 jobs a month since May -- well below the 150,000 monthly pace analysts say is needed to keep up with population growth.
