The nation's expanding economy produced 112,000 new jobs in June, the Labor Department reported today, far fewer than expected and well short of the numbers generated in the previous three months.
The average of job growth for the past four months remains relatively high, however, at 256,000, and economists and others interviewed today expressed little immediate concern about any broader slowdown in hiring. Unemployment held steady at 5.6 percent, where it has been most of the year, the Labor Department said.
With the general election drawing closer, however, economic interpretations of today's news took a back seat to political commentary.
President Bush, in a speech to small business people, noted that the number of jobs added to the economy since August now stands at 1.5 million.
"To me, that shows steady growth," he said. " . . . The economy of the United States has been through a lot. It's pretty remarkable to be able to stand up and say to you that the economy is strong and getting stronger."
Rep. Fortney "Pete" Stark (D-Calif.), senior Democrat on the Joint Economic Committee, had a different take, saying the "report does not paint a picture of a strong labor market."
"Job growth fell off sharply last month and was not as robust as we had thought in previous months, which makes it harder to close the jobs gap," Stark said. "Despite 10 months of job growth, there are still 1.1 million fewer non-farm payroll jobs than there were when President Bush took office. There are 1.8 million fewer private payroll jobs, including 2.7 million fewer manufacturing jobs.
"Workers are still waiting to see real gains in their paychecks," he added. "Workers' productivity gains have gone into profits not wage hikes, so paychecks will be stretched thinner as families face higher prices and rising interest rates."
The 112,000 job growth number was a bit of a shock to economists, who had predicted steady increases in the range of 240,000 for June. The most significant slowdown occurred in the manufacturing sector, which shed 11,000 jobs after four months of growth. Five thousand government jobs were lost and construction employment was flat.
All of June's job growth came in service industries.
While some analysts speculated that concern about energy costs last month might be partially responsible for the June slowdown, others suspected that the pace was either a statistical anomaly or just a bump in the road.
"We could be taking a breather for a moment," said Jeff Heath, president of Management Recruiters International. But "all in all, we're doing really fine. Even looking back to the 90s, some of the best months we had were averaging 250,000. So averaging 256,000 is pretty good. . . . We think July is going to be a very strong month. . . .
"A lot of industries that have been very very soft are starting to wake up. Technology, which was hit hard over past few years, is coming back across the board," Heath said.
If today's numbers "did anything," he said, "they probably sent a good signal for interest rates," reducing the inclination of the Federal Reserve to go faster in raising rates.
The Fed increased key rates by a quarter of a percent Wednesday, promising a "measured" pace of rate change in the future, in part because of concern that the pace of economic growth might sputter.
The report "justifies the Fed's 'measured' approach" to raising short-term interest rates, economist Ray Stone, of Stone &McCarthy Research Associates, wrote in a note to clients.
"June was a softer month," said Stephen Stanley of RBS Greenwich Capital Markets Inc. "It's possible it was oil prices," he said. But it's also possible that it was just "statistical noise," meaning a figures that are "out of whack" and will be revised. "People are going to wonder for a month," he said.
Whatever the cause, the monthly numbers become more important as the November general election draws closer.
The White House has continued to boast of the job growth since August as proof that the economy has made a solid comeback while Democrats have focused on what they say is the low wage nature of the jobs created during the Bush administration.
June's Labor Department report showed that average hourly wages rose by a 2 cents to $15.65, a 0.1 percent increase, less than the 0.3 percent expected. The average workweek fell by two tenths of an hour to 33.6 hours. Total hours worked in the economy dropped 0.6 percent.