U.S. Generates 112,000 Jobs In June,
Far Fewer Than Expected

Agence France-Presse 3aug04

WASHINGTON — The United States announced a shock slump in employment growth in June, raising fears the jobs boom may be fizzling and stirring a presidential election spat over the economy.

Employers took on an extra 112,000 new jobs in June, less than half the 250,000 predicted by economists, the Labor Department said.

The unemployment rate was stuck at 5.6 percent, unchanged from May, as 8.2 million people searched for work.

The news cast doubt over the strength of the labor market, which had been roaring with a gain of 912,000 jobs in the previous three months, including 235,000 in May.

Analysts said it also would re-confirm Federal Reserve policymakers' plans to move only slowly in raising interest rates.

Recently, the central bank raised the federal funds target rate, which banks charge each other overnight, by a quarter point to 1.25 percent, the first tightening in four years.

"It is a disappointing report all over," said BMO Financial Group senior economist Paul Ferley. "Clearly the Fed is not going to want to see this slowing trend continue in July. This eliminates any discussion about a 50-basis-point hike. It reinforces expectations of very modest tightening."

President George W. Bush, fighting for re-election November 2, glossed over the figures.

"The jobs increased by 112,000 in June, which means we have had a total of 1.5 million new jobs since last August," Bush said after meeting with small business owners at the White House. "To me, that shows the steady growth. It's one thing to be reporting, you know, the GDP numbers are up. It's another thing to be able to say more Americans are working, and that's what we want."