US unemployment climbed to 9.2 percent as job creation stalled last month, official figures showed on Friday, posing new challenges to US President Barack Obama’s administration’s efforts to rev up economic growth.
A much-awaited Labor Department report showed a second month in a row of virtually no improvement, jobs-wise. The economy generated a paltry net 18,000 positions last month, after just 25,000 in May.
The data, which showed 14.1 million Americans were still jobless two years after the 2008-2009 recession ended, was uniformly seen as bad news for Obama as Republican opponents challenge his economic record heading into presidential elections next year.
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It also came as the White House and congressional leaders were locked in talks on slashing government spending, necessary to close a yawning deficit, but which economists say could further curtail growth if too precipitous.
“Our economy as a whole just isn’t producing nearly enough jobs for everybody who’s looking,” Obama said after the jobs figures came out.
“The sooner we have a plan to deal with the deficit, the sooner we give our businesses the certainty they will need in order to make additional investments to grow and hire,” he said.
Expected to power up the economic recovery, the private sector added just 57,000 positions last month. This was compared with 241,000 in April.
Offsetting that were steep layoffs by federal, state and local governments as they slash payrolls to address budget deficits.
Added together, May and last month paint a picture of both extremely slow growth in the economy and a reticence by businesses, many of which have been piling up cash reserves, to expand their workforces.
US stock markets sank on the data, with the Dow Jones Industrial Average closing down 0.5 percent for the day.
Nearly all of the new jobs came from the service sector — and those predominantly in healthcare — despite hopes of a revival in US manufacturing to drive growth.
In addition, the figures showed an erosion of incomes, at a time when higher prices have already been hitting consumer spending.
“It was far worse than expected, and weak on all key dimensions — job creation, unemployment, the length of the workweek and hourly earnings,” said Nigel Gault, the chief US economist of IHS Global Insight.
“We can see no silver lining in this employment report, which is weak, weak, weak,” RDQ economics said. “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 2 percent.”
Obama’s chief economic adviser Austan Goolsbee called the data a “call to action.”
“Faster growth is needed to replace the jobs lost in the downturn,” he said.
However, Republican leaders blamed Obama’s economic policies for the malaise.
“Another month and another disappointing jobs report; 29 straight months of 8 percent-plus unemployment,” said Jeb Hensarling, chairman of the House Republican conference. “The president always tells us he inherited a bad situation. I concede the point, but he has made it worse. And after two-and-a-half years, it is time for him to take responsibility and to answer the question: ‘Where are the jobs?’”
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