World Business
US jobless falls to its lowest this year
By Bob Willis (China Daily)
Updated: 2010-06-28 10:03
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WASHINGTON -Employment fell in June for the first time this year, reflecting a drop in federal census workers as the decennial population count began to wind down, economists said before a report this week.
Payrolls declined by 110,000 last month, according to the median estimate of 51 economists surveyed by Bloomberg News ahead of a Labor Department report July 2. Private employment, which excludes government jobs, rose for a sixth consecutive month, the survey showed.
The pace of hiring indicates it will take years for the world's largest economy to recover the more than 8 million jobs lost during the recession that began in December 2007.
The turmoil in financial markets brought on by the European debt crisis raises the risk that employment will slow, depriving American households of the income needed to maintain spending.
"There is a somber tone that's returned to the US economic outlook since the start of the European debt crisis," said Ellen Zentner, a senior US economist at Bank of Tokyo-Mitsubishi UFJ Ltd in New York.
"Financial-market volatility makes businesses think twice about hiring. Spending will slow in the third quarter."
The Census Bureau says it let go about 243,000 of the temporary workers who helped in conducting the population count from mid-May to mid-June. Peak census employment reached about 586,000 in early May.
Private payrolls
For that reason, economists say private payrolls, which exclude government jobs, will be a better gauge of the state of the labor market for much of 2010. Employment at companies rose by 113,000 after a 41,000 gain in May, according to the median forecast of 29 economists surveyed.
The report will probably also show the unemployment rate rose to 9.8 percent last month, according to the survey median, from 9.7 percent. Joblessness, which reached a 26-year high of 10.1 percent in October, will take time to recede as the number of previously discouraged jobseekers returning to the labor force exceeds the number of available jobs.
Factory payrolls increased in June for the sixth straight month, according to the survey. Service providers have also been adding to headcounts this year.
The manufacturing rebound has helped underpin shares. The Standard & Poor's Supercomposite Industrial Machinery Index of 52 companies, including Caterpillar Inc and Deere, has increased 7.8 percent so far this year compared with a 3.4 percent decline in the broader S&P 500.
Household spending climbed 0.1 percent in May after being little changed the previous month, economists projected a report from the Commerce Department tomorrow will show.
Incomes likely rose 0.5 percent, the biggest gain in a year, as an increase in hours and average earnings more than made up for a smaller increase in employment, the report will also show.
The Federal Reserve last week said that slowing inflation and the fallout from Europe's debt crisis were among a number of reasons it would maintain interest rates low for "an extended period".
Bloomberg News