The economy gained just 18,000 jobs in June, the government reported Friday, sharply missing most expectations and coming in even weaker than the paltry 25,000 jobs added in May.
It marked the weakest month since September, when the economy was still losing jobs. Immediately after the release, stock futures plummeted and bond prices rose.
"At first, when I heard it, I thought maybe they had announced the wrong numbers, they were so bad," said Robert Brusca of Fact and Opinion Economics.Economists were expecting government job losses, but few had predicted that private businesses would pull the reins back so tightly.
Private businesses added only 57,000 jobs in June - the weakest growth since May 2010. Earlier this year, businesses had been adding more than 200,000 jobs each month."You look at the charts for private sector growth and you could see, we were building a nice, steady crescendo," Brusca said. "All of a sudden the bottom fell out!"
The main culprit economists are point to: uncertainty.
Businesses are hesitant to hire given uncertainty surrounding federal spending cuts and tax policy, as Congress still has yet to reach an agreement on the debt ceiling and long-term measures for trimming the nation's deficit.
"I think a lot of this is the backlash to the impasse in Washington," Brusca said. "If you're a small business man, you sit back and say I'm not doing anything, I'm not hiring -- until I see what happens in Washington."The main culprit economists are point to: uncertainty.
Businesses are hesitant to hire given uncertainty surrounding federal spending cuts and tax policy, as Congress still has yet to reach an agreement on the debt ceiling and long-term measures for trimming the nation's deficit.
But a variety of other factors also could have contributed to the recent weakness.
"There isn't a single silver bullet -- there are a number of factors coming together," said John Silvia, chief economist for Wells Fargo. "The tsunami, floods, higher gas prices, and the stalemate in Washington all create a lot of uncertainty."
More bad news: June's jobs report follows an already dismal report from May. Economists, for the most part, were hopeful that June would be better, predicting about 125,000 jobs added during the month, according to a CNNMoney survey.
But instead, the June jobs report brought bad news on nearly every front. The government revised the jobs numbers for April and May both downward, average weekly hours and wages fell, and the unemployment rate rose to 9.2% from 9.1% in May.
Meanwhile, the total number of unemployed people rose to 14.1 million. A whopping 44% of those folks, or 6.3 million people, have been unemployed for 6 months or more. The average length of unemployment is 39.9 weeks -- an all-time high.The underemployment rate, which includes people who want to work full-time but are forced to work part-time, rose to 16.2%, its highest rate since December.
Overall, the job market is still far from a full recovery. The economy needs to add about 150,000 jobs a month just to keep pace with population growth.So far, the nation has only gained back about a fifth of the 8.8 million jobs lost since the recession began.
Read the full story at: http://money.cnn.com/2011/07/08/news/economy/june_jobs_report_unemployment/index.htm
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