Jobs report suggests economic recovery is losing steam

WASHINGTON — The new jobs report provided the latest sign that the economic recovery may be losing momentum and that few industries are ready to spur job growth to replace the millions lost during the Great Recession.

The June employment report released Friday by the Labor Department suggested that with stimulus money running out, Washington, D.C., in the mood to retrench and the private sector struggling, it probably will take years to overcome the 7 million-plus jobs deficit.

"It all paints a picture that (while) we're not technically contracting anymore, it's just excruciatingly slow growth," said Heidi Shierholz, a labor economist at the Economic Policy Institute.

Private employers added a meager 83,000 jobs in June and reduced the average work hours and earnings of all employees. That sluggish growth came as the government laid off 225,000 temporary census workers, pushing the total number of Americans who lost jobs last month to 125,000.

The overall job losses reversed five straight months of gains and was the biggest monthly fall in payroll jobs since October.

Surprisingly, the unemployment rate edged down to 9.5 percent in June from 9.7 percent the previous month. But the rate drop came as hundreds of thousands of workers quit looking for jobs or otherwise dropped out of the labor market, which means they were no longer counted as officially unemployed by government statisticians.

Some analysts viewed the declining unemployment rate, which hit 10.1 percent in October, as a hopeful trend of stabilizing joblessness. But other economists believe the figure will climb back up and stay at or very close to 10 percent until at least early next year.

"We had a modest decline in unemployment, which is essentially a statistical fluke," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. "There had been evidence the economy was picking up in the spring. As it stands now ... most of the arrows are pointing down."

The most recent data on housing, manufacturing and car sales all show weakening activity, and much of the remaining federal stimulus money will fade by the end of the year, removing a major support to the economy.

While the census cutback led to the first monthly reduction in total U.S. jobs in six months, the expansion of private-sector employment for a sixth consecutive month confirmed the economy continues its slow recovery from the Great Recession, which began in December 2007.

"All told, our economy has created nearly 600,000 private-sector jobs this year. That's a stark turnaround from the first six months of last year, when we lost 3.7 million jobs at the height of the recession," President Obama said Friday. "Now, make no mistake: We are headed in the right direction. But ... we're not headed there fast enough."

There were renewed calls from liberal policy analysts, labor unions and economists for additional government stimulus to keep the recovery on track.

But with many Americans troubled by large federal budget deficits — and leading European nations pushing for austerity rather than more stimulus — optimism was short that lawmakers would approve any major new stimulus programs.

U.S. government payrolls, which swelled this year, stand to fall further in the coming months as the Census Bureau lets go more of the nearly 600,000 temporary workers hired for the decennial population count.

Budget-strapped local and state governments are slashing jobs, too, with little prospect of major federal aid.

That leaves private-sector hiring, which has turned anemic and looms as the single biggest threat to the recovery. Job and income gains underpin consumer spending and confidence on the part of individuals and businesses.

Some positive trends emerged from the June private-employment numbers. The administrative-services sector added 41,000 jobs, and business and professional services were up by 46,000.

Both are signs white-collar employment is picking up.

But payroll employment remains down 7.5 million from the pre-recession peak.

The number of long-term unemployed — people jobless for 27 weeks or more — was largely unchanged at a record 6.8 million. These jobless people make up 45.5 percent of all unemployed workers.

Material from McClatchy Newspapers is included

in this report.