Washington Hiring slowed to a near-standstill last month, raising doubts that the economy will rebound in the second half of the year.
The report baffled economists who had predicted much stronger job creation. And it escalated a debate in Washington over how to spur hiring and energize the economy while also cutting federal spending.
Just 18,000 net jobs were created in June, the fewest in nine months. The unemployment rate rose to 9.2 percent, the highest rate of the year, the Labor Department said Friday.
Stocks plunged after the report was released, although the market recovered some losses in late-afternoon trading. The Dow Jones industrial average closed down 62 points for the day. Broader indexes also fell.
For President Barack Obama, the sputtering job market represents a threat 16 months before his re-election bid.
“Our economy as a whole just isn’t producing nearly enough jobs for everybody who is looking,” Obama acknowledged in a speech in the White House Rose Garden.
Obama used the dismal job data to press Congress to raise the government’s borrowing limit. He also said Congress could strengthen the economy by passing three free-trade accords, approving government projects to create construction jobs and extending a Social Security tax cut.
But Republicans oppose an increase in the $14.3 trillion borrowing limit without steep cuts in spending. And they said the report reinforces their argument that tax increases would stunt job growth and shouldn’t be part of any deal.
Friday’s report suggested that a slowdown that struck the economy in the spring and curtailed job creation may be more than brief.
“June’s employment report doesn’t have a single redeeming feature,” said Paul Ashworth, an economist at Capital Economics. “It’s awful from start to finish.”
Two years after the recession officially ended, companies are adding fewer workers despite record cash stockpiles and healthy profit margins.
A result is that more people are giving up looking for work. More than a quarter-million people stopped their job searches in June. That kept the unemployment rate from rising even further. When laid-off workers stop looking for work, they are no longer counted as unemployed.