US new jobs plunge in June, jobless rate hits 9.2%

The US unemployment rate rose last month after the economy generated a paltry 18,000 jobs, the Labor Department said Friday, in a strong sign of stalling growth in the world's largest economy. The fall in new jobs pushed the overall unemployment rate up to 9.2 percent, adding to the challenges facing Barack Obama's administration as it begins looking to next year's presidential elections. The private sector, expected to power up the economic recovery, added just 57,000 positions -- compared to 241,000 in April. Offsetting that was a loss of 39,000 government jobs as authorities in federal, state and local administrations slash payrolls to address budget deficits. The department also revised downward by more than half its already-disappointing data for May -- only a net 25,000 jobs were generated. Added together, the two months paint a picture of both extremely slow growth in the economy and reticence of businesses, many of which have been piling up cash reserves, to expand their workforces. Nearly all of the new jobs came from the service sector -- and those predominantly in health care -- despite hopes of a revival in US manufacturing. In an additional sign of the challenges to growth, the average workweek declined; average hourly earnings declined; and the proportion of the population working all fell as well in the month. Though the drops in all three were slight, taken against rising prices it suggested US consumers' buying power fell in the month. Domestic consumption is by far the largest driver of the economy. "We can see no silver lining in this employment report, which is weak, weak, weak," said John Ryding and Conrad DeQuadros at RDQ economics. "We do not believe that the economy will drop back into recession... but this report suggests that underlying growth in the economy is probably only around two percent," they said. Economists speculated that the report could push the Federal Reserve to seek new measures to stimulate the economy, after the US central bank's $600 billion "quantitative easing" liquidity-boosting policy wrapped up at the end of June. "With only 18,000 jobs created in June, the Federal Reserve will be asking whether stimulus measures to date have been enough," said Manoj Ladwa of ETX Capital in London.