Nonfarm payrolls rose by a paltry 80,000 in June, while the unemployment rate remained stuck at 8.2 percent as the labor participation rate was unchanged at 63.8, the Labor Department said Friday. Economists polled by Thomson Reuters had called for a total gain of 90,000 jobs.
Payroll data for April were revised downward from the initial estimate of 77,000 to 68,000, while May was revised up from 69,000 to 77,000.
We continue to believe that higher uncertainty from events in Europe and, to a lesser degree, the potential for significant fiscal tightening in the U.S. early next year are causing firms to postpone investment and hiring decisions, Michael Gapen, a senior economist at Barclays Capital, said in a note to clients.
Private-sector employers added 84,000 jobs in June, the weakest in 10 months. Employment at service-providers added 67,000 workers after 98,000. Construction companies added 2,000 workers and retailers cut 5,400 jobs. Government payrolls decreased by 4,000.
In the manufacturing sector, employers added 11,000 workers in June. Factory job growth in the second quarter averaged 10,000 per month, compared with an average of 41,000 per month during the first quarter.
The average workweek for all employees on private nonfarm payrolls rose slightly by 0.1 hour to 34.5 hours in June, while average hourly earnings edged up by 6 cents to $23.50.
In the second quarter, employment growth averaged 75,000 per month, compared with an average monthly gain of 226,000 for the first quarter of the year.
We do not believe today's report is sufficient to shift the Fed into action at the next FOMC meeting on August 1 as we expect that most FOMC participants expected sluggish job growth in June when taking the decision to continue to the maturity extension program through year-end, Gapen said. We believe the Fed will remain alert and monitor the incoming data flow and we think action at the September FOMC meeting, which will include a press conference and a new set of economic projections, is more likely.
Markets often react strongly to Friday's employment report.
U.S. stock market futures are trading in red territory on Friday. Futures on the Dow Jones Industrial Average fell 26 points, to 12,806.00, while those for the S&P 500 index lost 2.40 points, to 1,359.00.
Futures for the Nasdaq 100 index dropped 2.75 points, to 2,639.75.