Friday’s disappointing June jobs report confirms observers’ worst fears about the economic recovery: The employment market is still struggling and failing to put enough Americans back to work.
The dour employment data are also likely to raise pressure on the Federal Reserve to do more to bolster the economy, and have negative implications for President Barack Obama's chances of re-election in November.
The Labor Department said non-farm payrolls expanded by just 80,000 jobs in June, falling just short of forecasts for 90,000 jobs, but improving slightly on a revised reading of 77,000 jobs in May. The private sector expanded by only 84,000, while government jobs declined by 4,000.
Job creation during the month wasn’t robust enough to reduce the country’s unemployment rate, which held fast at 8.2 percent, extending its three-plus-year run above 8 percent.
“It’s not great,” Mark Zandi, chief economist for Moody’s Analytics, told CNBC, referring to the payrolls number. “But the recovery is intact and moving forward, and hopefully [the economy will] gain some strength later in the year.”
The June number marks the third month in a row of weak hiring and is a fraction of the robust job growth seen earlier this year.
In January and February nonfarm payrolls grew by 275,000 and 259,000 jobs respectively, but the pace of job creation slowed suddenly in April and May, raising the question of whether the winter job gains were temporary and due to unseasonably warm weather rather than a recovering economy.
June’s 80,000-jobs number is well below the levels seen at the start of the year, and a monthly gain of between 125,000 and 150,000 jobs is needed just to keep up with the growth in the number of new people entering the workforce each month before even starting to whittle down the backlog of nearly 12.7 million unemployed Americans.
A pace of job creation that’s not strong enough to keep up with population growth is likely to raise pressure on President Obama, endangering his chances of reelection in November.
Speaking at a campaign rally in Ohio Friday, Obama said that June’s private-sector job growth of 84,000 was a “step in the right direction,” but not enough to be satisfied with the pace of hiring. Earlier, Republican presidential rival Mitt Romney denounced Obama’s economic policies, calling the jobless rate unacceptably high.
“American families are struggling,” Romney said at a press event held in New Hampshire. “The president’s policies have not gotten America working again, and the president is going to have to stand up and take responsibility for it.”