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Census jobs end; employment falls

Jobless rate lower as thousands stop looking for work

By Hiawatha Bray
Globe Staff / July 3, 2010

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Driven by the loss of 225,000 temporary census jobs in June, the nation’s employment fell for the first time in six months, a sign that the economy is still struggling to find its footing.

The national unemployment rate dropped to 9.5 percent from 9.7 percent in May, but economists said that was because 652,000 unemployed workers stopped looking for work in June, effectively dropping out of the workforce.

Nonfarm employment fell by 125,000 jobs in June, the most in a single month since October, the US Labor Department said yesterday. Private businesses boosted hiring by 83,000, but many economists had expected better numbers.

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

The rise in new private sector jobs offered some reason for optimism, said Gus Faucher, director of macroeconomics at Moody’s Economy.com in West Chester, Pa. “I think we’re seeing a period where there is going to be job growth, but it’s going to be soft until things start to pick up toward the end of the year,’’ he said.

But to Thomas Kochan, professor of work and employment research at MIT Sloan School of Management, the report paints a bleaker picture. “It’s really, really disappointing,’’ he said. “These are troubling, troubling numbers for an economy that’s supposed to be in recovery. . . . It shows that we have a very fragile recovery and one that the labor force is not sharing in.’’

Employment in Massachusetts is stronger than in many other parts of the country. The state’s unemployment rate for May, the most recent available figure, was 9.2 percent, according to the Executive Office of Labor and Workforce Development.

“We’ve actually seen our numbers go up over the last six months,’’ said David Sanford, executive vice president of business development for Winter Wyman Cos., a recruitment and temporary staffing firm in Waltham that specializes in placing candidates in well-paying jobs in software, health care, finance, and other companies. “Every month has been better than the last.’’

But Sanford said companies are still hiring tentatively. “I definitely think there is a fairly high level of caution out there,’’ he said. “Companies don’t want to get out too far ahead of themselves.’’

But there is less optimism among some Massachusetts workers in construction and related trades. David Fenton, business manager for the International Brotherhood of Electrical Workers Union Local 223 in Lakeville, which represents 600 workers in Southeastern Massachusetts, said business is “awful.’’

“It’s affecting everybody, young and old, from people just starting out in the industry to guys who are looking for another year before they retire,’’ he said.

In response to the jobs report, President Obama noted that the US economy has created almost 600,000 private-sector jobs so far this year. “That’s a stark turnaround from the first six months of last year, when we lost 3.7 million jobs at the height of the recession,’’ he said.

Obama, speaking at Andrews Air Force Base yesterday before flying to West Virginia for the funeral of Senator Robert Byrd, said that job growth was still far too slow. “The recession dug us a hole of about 8 million jobs deep,’’ he said. “And we continue to fight headwinds from volatile global markets. So we still have a great deal of work to do to repair the economy and get the American people back to work.’’

Obama favors another dose of federal stimulus spending, on top of the $862 billion stimulus package enacted last year. Kochan said that such a boost is desperately needed. “The only alternative is that we will face a decade of people underutilized in the labor force, and end up with an economy that could look very much like Japan,’’ he said.

A spending plan that included provisions to extend benefits for long-term unemployed workers has stalled in the Senate, due to concerns among some members of Congress over spending that might worsen swollen federal deficits. On Wednesday, Senator Scott Brown of Massachusetts joined with all but two of his fellow Republicans to block the $33.9 billion proposal.

Faucher said the weak jobs report makes it more likely that an unemployment extension will pass and that Congress will enact other spending measures to stimulate the economy.

Todd Wallack of the Globe staff contributed to this report. Hiawatha Bray can be reached at bray@globe.com.