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Unemployment rate holds steady again at 8.2 percent

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WASHINGTON (AP) - U.S. employers added only 80,000 jobs in June, a third straight month of weak hiring that shows the economy is still struggling three years after the recession ended.

Photo: Associated Press

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

The economy added an average of just 75,000 jobs a month in the April-June quarter - one-third of the pace in the first quarter.

For the first six months of 2012, employers added an average of 150,000 jobs a month. That's fewer than the 161,000 average for the first half of 2011.

Weaker job creation has caused consumers to pull back on spending.

Europe's debt crisis is also weighing on U.S. exports. And the scheduled expiration of tax cuts at year's end has increased uncertainty for U.S. companies, making many hesitant to hire.

Job creation is the fuel for the nation's economic growth. When more people have jobs, more consumers have money to spend - and consumer spending drives about 70 of the economy.

The annual slump

The June jobs report confirmed evidence of an unhappy long-term trend: Hiring is slumping for a third straight year.

In each of the past three years, hopes for a job-market recovery were lifted by robust gains early in the year. But in each case, those hopes fizzled as hiring slowed by spring or summer.

The 80,000 jobs added last month marked a third straight month of weak hiring - an average of 75,000 jobs for the first quarter of 2012. That's far too few to lower the unemployment rate.

The 2011 job slump lasted from May through August. Over that period, the average monthly job gain was 80,000.

In 2010, the slowdown, from June through September, consisted of four straight months of job losses. The average loss was 76,000.

Sourness on Wall Street

The reaction of stock investors? A collective thumbs-down.

The market opened sharply lower after the jobs report was issued. The Dow Jones industrial average dropped 157 points - about 1.2 percent - in early-afternoon trading. Other stock indexes also sank.

Money flowed instead into U.S. Treasurys, which investors perceive as safer than stocks when the economy is weakening.

Never mind that you get almost nothing in return for lending money to the federal government these days. The yield on the benchmark 10-year U.S. Treasury note fell to 1.54 percent, from 1.59 percent on Thursday.

The lost jobs

Five million jobs.

That's how many the economy has still failed to recover since the Great Recession officially ended three years ago.

The nation lost nearly 8.8 million jobs between January 2008 and February 2010. Since then, it's regained more than 3.8 million - less than 44 percent.

The economy has added just 137,000 jobs a month since employment hit bottom. At that pace, it would take three more years for employment to return to where it was in January 2008.

Fed to the rescue?

As job growth sputters, attention is turning to whether the Federal Reserve will try to give the economy another jolt.

Among economists, the conventional wisdom is that the Fed won't act immediately and won't act at all unless the economy takes a sharper turn for the worse.

The Fed's options are complicated by the presidential election, just four months away. Some analysts have said the Fed may be reluctant to take action close to the election out of concern it could be seen as affecting the vote.

After the Fed's last policy meeting, which ended with a decision to extend a bond-buying program, Chairman Ben Bernanke said, "If we're not seeing a sustained improvement in the labor market, that would require additional action."

The Fed's next policy meeting begins July 31.

Cushioning the pain

When the job market and the economy weaken, energy prices tend to drop. That means relief for businesses and consumers.

Lower oil prices mean cheaper diesel and jet fuel for shippers and airlines. Falling gasoline prices give drivers more money to spend on things like cars, appliances and vacations that fuel economic growth.

Oil has fallen 21 percent from its peak in late February - to $87.22 barrel. And gasoline now costs $3.34 a gallon, down 15 percent from early April.

As for the good news...

Average hourly pay rose 6 cents in June - the biggest gain in nearly a year. Hourly pay has risen 2 percent in the past 12 months. It's slightly outpacing low inflation, which has been held back by lower gas prices.

The construction industry added jobs for the first time in five months. The gain was small - 2,000 jobs - but it could rise in coming months because builders are breaking ground on more homes. And spending on commercial construction is up.

Manufacturers added jobs for a ninth straight month. The average work week grew. And companies hired 25,000 temporary workers.

Economists say those are generally signs that hiring will increase in the months ahead.

That said, job growth will likely stay too weak to drive down unemployment significantly.

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