Payrolls drop by 125,000, jobless rate falls

A wave of census layoffs cut the nation’s payrolls in June for the first time in six months, while private employers added a modest number of jobs. The unemployment rate dipped to 9.5 percent, its lowest level in almost a year.

Employers cut 125,000 jobs last month, the most since October, the Labor Department said Friday. The loss was driven by the end of 225,000 temporary census jobs. Businesses added a net total of 83,000 workers, an improvement from May. But that’s also below March and April totals.

The report reinforces concerns that the recovery is stalling.

Unemployment dropped from 9.7 percent to 9.5 percent, the lowest level since July 2009. But it fell because 652,000 people gave up on their job searches and left the labor force. People who are no longer looking for work aren’t counted as unemployed.

The latest figures suggest businesses are still slow to hire amid a weak economic recovery. Many economists were hoping to see more job growth, which would fuel the economy by boosting consumers’ ability to spend.

“It could have been worse, but it wasn’t good,” said Nigel Gault, chief U.S. economist at IHS Global Insight, an economic forecasting firm. “It’s adding to the evidence that growth has slowed.”

People left the work force “because they think there’s nothing out there,” he added.

In a separate report, factory orders fell by 1.4 percent in May, the Commerce Department said. It was the first decline after nine months of gains and the biggest drop since March 2009.

The reports follow a slew of data and developments this week that point to slower growth in the months ahead.

In May, home sales plunged and construction spending dropped after a popular homebuyers’ tax credit expired on April 30. Consumer confidence has fallen sharply. The European debt crisis has sent U.S. financial markets downward, lowering household wealth. And more than a million jobless Americans have been cut off from unemployment benefits after Congress adjourned for a weeklong Independence Day recess without extending federal aid.

President Barack Obama said the economy is moving in the right direction, but not quickly enough. He seized on the latest data to push for more government stimulus — including the extension of jobless benefits — to aid the recovery.

“We’re not headed there fast enough for a lot of Americans,” Obama said. “We’re not headed there fast enough for me, either.”

The nation still has 7.9 million fewer private payroll jobs than it did when the recession began. It takes about 100,000 new jobs a month to keep up with population growth. The economy needs to create jobs at least twice that pace to quickly bring down the jobless rate.

All told, 14.6 million people were looking for work in June. Counting those who have given up their job searches and those who are working part time but would prefer full-time work, the underemployment rate edged down to 16.5 percent from 16.6 percent in May.

Manufacturers, the leisure and hospitality industries, temporary staffing agencies, and education and health services providers all added jobs. Retailers, construction firms and financial service providers cut payrolls.

Private employers added only 33,000 jobs in May, the department said, below an earlier estimate of 41,000. April private-sector payrolls were revised up to show a total gain of 241,000 jobs, higher than the earlier estimate of 218,000.

The Census Bureau added more than 400,000 workers in May to assist with the 2010 employment count, but most of those jobs lasted only six to eight weeks. Economists expect that census layoffs will impact the payroll data for several more months, but not by nearly as much.

The average work week shortened to 34.1 hours from 34.2, the government said, a disappointing drop after three months of gains. Hourly wages also fell by two pennies to $22.53. The declines mean workers earned less money in the last month.

The employment report comes after Congress adjourned Thursday for the weeklong Independence Day recess without extending jobless aid. That has already left 1.3 million people without benefits. Senate Republicans blocked the extension that would keep checks going to people who have been laid off for long stretches, citing concerns over the federal deficit.