The U.S. labor market has lost a step since spring and the trend of lackluster job growth likely continued into June, as election-year uncertainty and a global slowdown crimped investing and hiring, economists say in anticipation of the June nonfarm payrolls report due Friday.

Clearly, the labor market is slowing and the other indicators that have come out since the last report have generally been on the softer side, said Srinivas Thiruvadanthai, an economist with the Jerome Levy Forecasting Center.

Payrolls are estimated to have climbed in June by 90,000, after a paltry 69,000 gain in May, according to the median forecast of economists surveyed by Reuters ahead of Labor Department figures due Friday. The public sector will continue to shed jobs, with a decline of 10,000 expected in June.

In April and May, employers in the U.S. added an average of merely 73,000 jobs, less than one-third the rate of employment growth in the late-winter months.

With the labor participation rate likely remaining flat at 63.8 percent and the pace of job creation too weak to make a material improvement, the unemployment rate should hold steady at 8.2 percent in June. Joblessness has been stuck above 8 percent since February 2009, the longest stretch in monthly records dating to 1948.

Moreover, the national average tends to hide demographic variations, which paint a far bleaker picture.

In May, young adults ages 18 to 29 faced a non-seasonally adjusted unemployment rate of 12.1 percent, Paul T. Conway, president of Generation Opportunity in Arlington, Va., and former U.S. Labor Department chief of staff, pointed out.

The rate would have been 16.9 percent, the highest since World War II, if Labor Department had factored in the 1.7 million young adults who had given up looking for work, Conway added.

Job gains lead to income growth that supports consumer spending, which accounts for more than 70 percent of U.S. economic growth. Yet, U.S. consumers have grown increasingly pessimistic over the past month and are holding back on spending.

The Reuters/University of Michigan survey of consumer sentiment dropped to 73.2 in June -- its lowest level of the year -- as spending had been flat in May, in spite of modest growth in income.

Politically, weak consumer spending will be of concern to President Barack Obama's re-election chances in November, when the economy is likely to be the top issue for voters.

With slow job growth and high unemployment, wages are expected to remain soft. Average hourly earnings will increase 0.2 percent, while the workweek will hold at 34.4.hours.

Manufacturing Losing Its Shine

Manufacturing jobs increased notably in the winter but have started to slow over the prior two months and are expected to add merely 6,000 jobs in June.

Manufacturing has remained the bright spot in the recovery all along and now economists are worried that the sector could be peaking out.

The sector contracted in June for the first time in nearly three years.

Tuesday's ISM manufacturing index, which measures manufacturing activities on a national level, plunged to 49.7 from 53.5 in May, registering below the symbolic 50 level for the first time since July 2009 - - when the U.S. was just emerging from the last recession.

Clearly this is the biggest sign yet that the U.S. is catching the slowdown that is well under way in Europe and China, Paul Dales, senior U.S. economist for Capital Economics, wrote in a note.

Weather Payback Vs. Fundamental Weakness

A key question in the near-term outlook is how much of the weakness in April and May was temporary and how much was fundamental.

The weather payback story suggests much of the weakness is temporary. In particular, the mild winter pulled forward growth, causing artificial strength in the winter and artificial weakness in April and May. Then there's the global slowdown story, which argues that the slowdown in U.S. growth is likely to continue.

The economy is not growing rapidly to create a lot of jobs and that's a fundamental reason (for the weakness), Thiruvadanthai said.

U.S. gross domestic product rose at an annualized rate of 1.9 percent in the first quarter of 2012, and is expected to deteriorate even more in the second quarter, with economists at Barclays calling for a growth rate of 1.5 percent. In the last three months of 2011, the U.S. economy grew at a 3 percent pace.

The 2000s was not a great period for job creation, but even then, we were creating about 200,000 to 250,000 jobs (per month), Thiruvadanthai said. During that time, the GDP growth was much stronger and we were getting at least 3 percent to 3.5 percent in GDP growth.

But other economists are more optimistic as they believe the real labor market condition is not as bad as the figures from the Labor Department may indicate.

I don't think the recent numbers we've seen have been terribly soft, said Raymond James chief economist Scott Brown. They may have been disappointing for the markets, but if you look at the last six months just in the private sector, we are averaging like 180,000 jobs per month, which is pretty good.

Federal Reserve

The speed of the slowdown will dictate the timing of the Federal Reserve's next move, according to Ethan S. Harris, North American economist for Bank of America Merrill Lynch.

The Fed opted to extend Operation Twist -- a plan to sell short-term bonds while purchasing longer-term securities -- at its June Federal Open Market Committee meeting.

Officials also cut forecasts for economic growth this year to a range of 1.9 percent to 2.4 percent, from between 2.4 percent and 2.9 percent in their previous projection in April. As for unemployment, the central bank now expects the jobless rate to stick around the 8.0 percent to 8.2 percent range, from its April projection of around 7.8 percent to 8.0 percent.

Fed Chairman Ben S. Bernanke told reporters during the post-FOMC press conference in June that he's hoping for the best, but is prepared to do more in case things get worse.

The extension of Operation Twist is a placeholder that buys time for Bernanke to gather a consensus and look for more compelling evidence that the recovery is faltering, Harris wrote in a note.

The next Fed policy announcement is on Aug. 1, which means the Fed will have only the major indicators for June in hand. However, by the Sept. 13 meeting, the Fed will have a better look at July and August.

Harris projects the Fed will enact a third round of the quantitative easing program, or QE3, of $500 billion by Sept. 13.

Yet, no matter what the Fed does, the impact will most likely be muted.

At this point, the Fed's policy may have some short-term influence on the markets because the markets will react to sentiment, but beyond that, they don't have any influence on the economy, Thiruvadanthai said, adding that the possibility for job creation to pick up in the second half of the year is very low.

We might even start having job losses before the end of the year because the economy is weakening and it could move towards a recession, Thiruvadanthai said.