US job growth loses momentum

Barack Obama said the economic report showed the US still had “a long way to go” [Reuters]

The number of new jobs created in the US in June was the lowest in nine months, dousing hopes the economy would regain momentum, according to new economic data.

Only 18,000 new jobs were created in the month, well below economist’s expectations for a 90,000 rise, the labour department said on Friday.

Barack Obama, the US president, said the report showed the US still had “a long way to go”.

“We have added two million new private sector jobs over the last 16 months, but the recession cost us 8 million, he said in a statement at the White House.

“That means we still have a big hole to fill.”

The report sent global stock markets lower and US markets opened lower, with the Dow Jones down 87 points or 0.7 per cent. The dollar also fell a cent against the euro.

Shattered expectations

The report shattered expectations the economy was starting to accelerate after a soft patch in the first half of the year.

The data could prompt calls for the Federal Reserve to consider further action to help the economy, but Fed officials have set a high bar.

“This confirms our view that the Fed will continue to keep rates on hold into 2012 and if weak employment continues it will be pushed out even further,” said Tom Porcelli, chief economist, RBC Capital Markets in New York.

Signs the labour market is struggling is also a major blow for the Obama administration, which has struggled to get the economy to create enough jobs to absorb the 14.1 million unemployed Americans.

The economy is the top concern among voters and will feature prominently in Obama’s bid for re-election next year.

So far, the economy has regained only a fraction of the more than 8 million jobs lost during the recession.