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U.S. Economy Added 112,000 Jobs in June; Jobless Rate Holds at 5.6 Percent.
Bloomberg ^ | 07/02/04 | Bloomberg

Posted on 07/02/2004 6:31:42 AM PDT by Pikamax

U.S. June Payrolls Rise 112,000, Less Than Forecast (Update2) July 2 (Bloomberg) -- U.S. companies added 112,000 workers to payrolls in June, less than half the median forecast, and factory jobs fell for the first time in five months, suggesting businesses were turning more cautious entering the year's second half.

The unemployment rate held steady at 5.6 percent for a third month, the Labor Department reported in Washington. Job gains in the previous two months also were revised downward by a total of 35,000, to 235,000 in May and 324,000 for April. U.S. Treasury securities prices rose after the report. June's total was less than the lowest forecast in a Bloomberg News survey.

The creation of 1.3 million jobs so far this year, the biggest six-month gain in four years, has yet to bolster President George W. Bush's job approval rating ahead of the November election. Smaller payroll and wage gains may allow Fed policy makers to keep their commitment to raise the target interest rate at a ``measured'' pace to contain inflation.

``The economy has almost shifted into a lower pace of growth,'' said Gary Pollack, who manages $12 billion in fixed- income securities at Deutsche Bank AG's private banking group in New York, an in interview. ``The Fed can move at a measured pace.''

The benchmark 10-year U.S. Treasury 4 3/4 note fell 31/32 point, pushing the yield down 12 basis points to 4.44 percent at 8:50 a.m. in New York.

Economists had expected payrolls would rise by 250,000 following a previously reported increase of 248,000 in May, the median of 73 forecasts in a Bloomberg News survey. They projected the unemployment rate would hold at 5.6 percent. The lowest forecast was 160,000.

Bush Ratings

The number of jobs created this year was the most for any six- month period since December 1999-May 2000.

``Things have cooled off a bit,'' said David Resler, chief economist at Nomura Securities International inc. in New York. ``We aren't growing gangbusters, but at the same time we are still in a pretty healthy and expanding economy.''

Bush's job approval rating remained near a low for his term, leaving him in a statistical tie with his Democratic challenger, Massachusetts Senator John Kerry, according to a New York Times/CBS News poll released Wednesday. The poll showed 40 percent of those surveyed approved of how Bush is handling the economy, compared with 52 percent who disapproved.

``I'm not surprised that the politics are tight here, even though the economy is clearly improving,'' said David Kelly, an economic advisor at Putnam Investments in Boston in an interview Tuesday. Consumers ``spent the income tax refunds. The refinancing is gone. They are waiting for the wage gains.''

Employment in service-producing industries, which include retailers, banks and government agencies, rose 122,000 last month after rising 169,000 in May, according to the Labor Department report. The increase was led by a 39,000 rise in professional and business services, which include temporary help agencies.

Manufacturers lost 11,000 jobs last month, the first decline since January. The manufacturing workweek fell to 40.8 hours from 41.1 in May and overtime held at 4.6 hours for a second month.

Hours and Incomes

Average weekly hours worked for all employees dropped to 33.6 from 33.8 the prior month. Economists had expected hours would hold at 33.8 hours. Last month's funeral for former President Ronald Reagan caused some offices to close and may have contributed to the decline in hours, some economists said.

Workers' average hourly earnings rose 0.1 percent, or 2 cents, after a 0.3 percent increase the previous month. Economists had expected a 0.3 percent increase in hourly wages. Average weekly earnings fell to $525.84 from $528.29 in May.

Rising incomes are needed to keep consumers spending as interest rates rise. Fed policy makers this week raised the target for their benchmark interest rate for the first time in four years, citing ``solid'' growth and ``improved'' employment conditions. The rate rose to 1.25 percent a 46-year low of 1 percent.

Companies

MCI Inc., the second-biggest U.S. long-distance carrier, last week said it will close two call centers and cut 2,000 jobs as revenue declines and government curbs on telemarketing make phone services harder to sell.

MCI will close centers in Colorado Springs, Colorado, and Wichita, Kansas, and reduce the number of jobs in centers in Greenville, South Carolina, and Iowa City, Iowa, said Peter Lucht, the company said.

Other companies are still hiring.

``We are at this point adding folks,'' said Edward Campbell, chief executive of Nordson Corp., a Westlake, Ohio-based maker of equipment that applies adhesives, in an interview yesterday. Hiring is ``up a small amount in the first half, but I expect that rate to accelerate in the second half of our fiscal year.'' Orders are up 16 percent in the last 12 weeks compared with the same period last year, he said.

Company executives plan to boost payrolls this quarter. Thirty percent of U.S. employers plan to add workers from July through September, the most since the last three months of 2000, according to a survey issued earlier this month by Manpower Inc.

The result, based on a survey of 16,000 employers, compares with 28 percent in the second quarter and 20 percent in the first, according to Manpower, the world's No. 2 supplier of temporary staff by revenue, behind Switzerland's Adecco SA.

Spending

Consumer spending, which accounts for 70 percent of the economy, is likely to expand 3.8 percent this year, the most in five years, following a 3.1 percent increase in 2003, according to the median estimate in a separate survey of economists by Bloomberg News last month. That will propel the economy to grow 4.6 percent this year, the most in two decades, according to the survey.

Among blacks, the unemployment rate rose to 10.1 percent from 9.9 percent in May. The jobless rate for Hispanics decreased to 6.7 percent from 7 percent and for whites held at 5 percent for a second month.

For teenagers, unemployment dropped to 16.8 percent last month from 17.2 percent. The jobless rate for women rose to 5 percent from 4.8 percent. The jobless rate for men fell to 5 percent from 5.2 percent.


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events; Politics/Elections
KEYWORDS:

1 posted on 07/02/2004 6:31:43 AM PDT by Pikamax
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To: Pikamax

So....Is this great news or are we all going to die? : )


2 posted on 07/02/2004 6:44:49 AM PDT by ISonnet
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To: ISonnet

WE'RE ALL GOING TO PERISH!!!!


not really, not great news, but certainly not horrible news, solid growth.


3 posted on 07/02/2004 6:45:56 AM PDT by Pikamax
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To: Pikamax
Watch CNN and MSNBC emphasis a SLOW down in the Job market!

If Kerry is Elected, America is doomed!
4 posted on 07/02/2004 6:50:19 AM PDT by forAmericasFutureVoteBush (Hold on please, I have to go to the toilette and take a Kerry.)
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To: forAmericasFutureVoteBush

Loss of 11,000 in manufacturing. That ain't to pretty. Does anyone know where the 150,000 just to keep up with immigration came from? I keep hearing that but I can't believe it's true. We have some historical structural changes going on that just have to be weathered. New economy growing pains I guess you could say.


5 posted on 07/02/2004 6:55:17 AM PDT by myword
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To: Pikamax

Networks and CNN will feature this as "worst economy since the great depression!"

But my amateur's opinion is that by September we will see the unemployment rate drop (back to school, then holiday hiring).

Also, starting in 3-4 weeks, we are going to see some sensational corporate earnings reports for the second quarter.

This should spur the market. Barring a terrorist event, or a big spike in fuel costs this economy is going to roar through the end of the year.

Jeez! It's already churning along now!


6 posted on 07/02/2004 7:32:38 AM PDT by Rhetorical pi2
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To: myword
I can't believe it's true.

Sure you can.  It's a choice between observable reality and a desire for bad news.  Wages are up, unemployment is down, we're better off.  Manufacturing ok, (if you really want I can get the BLS figures for you)-- and it's doing a lot better than farming.  

7 posted on 07/02/2004 8:04:49 AM PDT by expat_panama
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To: expat_panama

Does anyone know where the 150,000 just to keep up with immigration came from?

That statement I keep hearing above is the one I can't believe is true. You read something into my post that wasn't there. I want good news buddy. This is just so so news. But i can't believe the statement I keep hearing about 150,000 just to stay even with immigration.


8 posted on 07/02/2004 8:08:06 AM PDT by myword
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To: myword
But i can't believe the statement I keep hearing about 150,000 just to stay even with immigration.

Oh.  That's different.

Never mind.

I'm just so used to everyone being bushbashers about jobs...

that they're blind to the good things that are really happening...

U.S. Economy Added 112,000 Jobs in June; Jobless Rate Holds at 5.6 Percent.

I promise to finish my morning coffee before operating a computer next time.

9 posted on 07/02/2004 8:21:45 AM PDT by expat_panama
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To: expat_panama

I hear you and this actually is pretty good. I'm just a little disappointed because I wanted great news as a backdrop for Bush's speech.


10 posted on 07/02/2004 8:32:46 AM PDT by myword
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To: Pikamax

just now on foxnews;

fred barnes said that the household survey says that this
was the highest number of jobs EVER.


11 posted on 07/02/2004 3:44:19 PM PDT by smonk
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To: myword

How is this good news? The WSJ reported it as such:

"The pace of job growth in the U.S. slowed for the first time in four months in June and fell short of expectations, catching Wall Street off guard.

The June payroll gain was less than half the 250,000 that economists had expected, according to a survey by Dow Jones Newswires and CNBC. It was also below the 150,000 monthly additions that economists say are necessary to keep the job market stable."

It's not awful news. But it's certainly no statistic to brag about.


12 posted on 07/03/2004 4:23:01 PM PDT by MaxPlus305
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