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U.S. posts weak 80,000 jobs gain in June

WASHINGTON (MarketWatch) -- The U.S. created just 80,000 jobs in June -- about one-third of them temporary -- as evidence hardened that the economy has hit another rough patch.

The unemployment rate was unchanged at 8.2%, the Labor Department said Friday.

In U.S. markets, stock prices (SPX) fell. Economists surveyed by MarketWatch were expecting a net increase of 100,000 jobs in June.See Market Snapshot.

The disappointing employment report adds to fresh worries about the U.S. economy at a time when growth is slowing around the world and Washington is gridlocked about how to address the malaise.

The decline in job growth has raised the odds of further Federal Reserve intervention in the economy. The central bank will hold its next major meeting in late July and the Fed could launch a new program to buy bonds to try to drive down interest rates.

The poor employment report is also a blow to President Barack Obama as he tries to fend off Republican candidate Mitt Romney and win reelection in November. Romney, a former businessman, has blamed the high unemployment rate on White House policies and made the economy the centerpiece of his campaign against the president. Read reaction to jobs report.

Hiring tailed off sharply in the second quarter, with job growth averaging 75,000 a month, compared to a 226,000 average in the first quarter.

Job growth in May was revised up to 77,000 from an original estimate of 69,000, but April's figure was revised down to 68,000 from 77,000, according to the Labor Department's regular survey of business establishments.

"All the strength we saw in the first quarter has tailed off. Now we are heading into the second half of the year on softer footing," said Jennifer Lee, senior economist at BMO Capital Markets. "Employment growth is slowing, and companies are not hiring as fast as they were."

The lower pace of job creation over the past three months falls well short of what's required to reduce the unemployment rate to precession levels. The economy would have to add 250,000-plus jobs each month for several years to trim unemployment to around 6%.

The current pace of hiring isn't even enough to absorb the natural increase in the labor force, which grows by more than 100,000 workers each month.

Nor is there much reason to expect hiring to accelerate in the near future. The festering European financial crisis and a slowdown in large overseas markets such as Chinese have hurt American exporters, rattled stock markets and unnerved American consumers.

U.S. businesses are also worried about the threat of a so-called fiscal cliff -- large spending cuts and big tax increases slated to kick in on Jan. 1 unless Congress changes current law. Some say they will delay hiring and investment decisions until Washington acts.

"When the pace of growth is already slow, there is a pervasive sense of caution," said Jim Baird, chief investment strategist at Plante Moran Financial Advisors.

Inside jobs report

The private sector added 84,000 jobs last month. The biggest gain in June occurred in the field of professional services, whose employment rose by 47,000. More than half of those jobs were temporary, however.

While temporary jobs often lead to full-time employment, the sharp increase last month might indicate companies are unwilling to permanently boost payrolls at this time.

What's more, a separate government survey of households suggests that many of the new workers hired were teenagers getting out of school. The unemployment rate in the 16-19 bracket fell almost a full percentage point to 23.7%, while employment in a part of the economy that hires lots of teenagers, food services, climbed 15,000 last month.

Other sectors that increased employment included health care (13,000) and manufacturing (11,000). Hiring in most other segments of the economy was little changed.

Government, meanwhile, trimmed 4,000 jobs, one of the smallest declines in the past several years. Government employment has fallen by more than 600,000 since the end of the last recession in mid-2009.

The average workweek last month rose 0.1 hour to 34.5, suggesting that companies preferred to rely on overtime instead of adding staff.See charts of the average workweek.

Average hourly earnings climbed 6 cents to $23.50. Earnings are up 2% over the past year.

A broader measure of unemployment, known as the U6 rate, edged up to 14.9% from 14.8% in May. The category includes discouraged jobseekers and those forced to work part time because they cannot find full-time positions.

The U6 rate had fallen to as low as 14.5% in February -- the lowest level in several years -- before turning higher.

The U.S. labor-force participation rate was unchanged in June at 63.8%.