Hiring slowed to a near-standstill in June, raising doubts that the U.S. economy will rebound in the second half of the year after a spring slump.
The economy generated only 18,000 net jobs in June, the fewest in nine months. The unemployment rate rose to 9.2 percent, the highest rate of the year, the Labor Department said Friday.
‘‘June’s employment report doesn’t have a single redeeming feature,’’ said Paul Ashworth, an economist at Capital Economics. ‘‘It’s awful from start to finish.’’
Two years after the recession officially ended, companies are adding fewer workers despite record cash stockpiles and healthy profit margins.
Businesses added just 57,000 jobs last month – the fewest in more than a year. Governments cut 39,000 jobs. Over the past eight months, federal, state and local governments have cut a combined 238,000 positions.
June was the second consecutive month of feeble job growth. And the government on Friday revised down the number of jobs the economy added in May, from 54,000 to 25,000.
The economy typically needs to add 125,000 jobs per month just to keep up with population growth. And at least twice that many jobs are needed to bring down the unemployment rate.
The number of people out of work, plus people who have stopped looking for a job and those who work part time but want a full-time job, rose to 16.2 percent in June from 15.8 percent in May, according to the federal Bureau of Labor Statistics. A year ago the figure was 16.5 percent. (Over the past 10 years, the rate has ranged from a low of 7.3 percent in March 2001 to a high of 17.4 percent in October 2009.)
Ken Mayland, head of ClearView Economics in Pepper Pike, wrote in a note to clients that Friday’s jobs figure was “stunningly low.”
The bad weather in the United States, a supply-chain disrupting earthquake and tsunami in Japan and high oil prices have changed the mindset of employers, Mayland said.
“They have gone from [an] expand-and-hire mode to a hunker down and wait and see mode. The divisive [federal] politics have probably not helped,” he wrote.
First-time claims for unemployment are not rising nationally, which indicates the problem is not layoffs, he said. “The main problem is on the job creation side,” he wrote.
“As bad as the job picture looks from payrolls, the situation appears substantially worse from the [Department of Labor Household Survey] look at the employment situation,” Mayland wrote. “The recovery has now become ‘fragile’ and stands uncomfortably close to another brush with recession.”
The nation needs to brace for the loss of more federal, state and local government jobs, Mayland wrote. “These workers were earning incomes and now in the absence of those incomes spending will decline. This will cause other workers to lose jobs. This is, in part, fiscal drag in action. Get used to it. A LOT more is coming.”
The Federal Reserve Bank of Cleveland noted in a report Friday that just more than half of private industries added to their payrolls in June.
Overall, goods-producing industries added 4,000 jobs nationally in June, with manufacturing adding 6,000 jobs, mining and logging adding 7,000 but construction falling 9,000. The private service industry added 53,000 jobs, the Cleveland Fed reported.
From February to April, nonfarm payrolls expanded an average of 220,000 a month; the average for May and June was 22,000 jobs, the Cleveland Fed reported.
Alan Tonelson, research fellow at the U.S. Business and Industry Council in Washington, D.C., said the federal government’s economic recovery strategy “needs a thorough overhaul.”
Tonelson, a regular visitor to Northeast Ohio manufacturers, said that the federal government stimulus plan and selected bailouts have failed. “Clearly, much more needs to be done,” he said.
The federal government needs to make closing the trade deficit a top priority, he said. Doing so will broaden the tax base and not add to the deficit, Tonelson said. The president also needs to confront China and other countries that have “predatory trade practices,” he said.
“There are too many subsidized foreign goods coming into the United States,” he said.
Without a reversal of the United States’ current trade policy, the economy will continue with low growth and high unemployment, Tonelson said.
Unemployment has topped 8 percent for 29 months, the longest streak since the 1930s. At the same point after the previous three recessions, unemployment averaged just 6.8 percent.
Most economists expect unemployment to remain near 8 percent by next year’s election. That would mean Obama would face a higher unemployment rate than any president running for re-election since World War II.
Most analysts had hoped that the economy would pick up in the second half of this year. Manufacturing output has shown signs of reviving and auto factories in Japan have resumed production. At the same time, gas prices have dropped to a national average of $3.59 a gallon, from a peak of nearly $4 in early May.
But those factors, plus a still-slumping housing sector and fallout from the European debt crisis, might continue to hold back the U.S. economy for months.
The average work week declined to 34.3 hours, from 34.4, which means employers demanded less work from their staffs. Usually when companies are preparing to hire, they demand more hours from their existing staffs. Temporary employment fell 12,000. Businesses generally hire more temporary workers before taking on permanent ones.
The number of unemployed workers rose almost 175,000 to 14.1 million, pushing up the unemployment rate.
