WASHINGTON – A scant 6,000 new jobs were created in July, the Labor Department said Friday in a report likely to increase fears that the U.S. economy will decline again in a so-called "double dip."
July's job total came in far below Wall Street economists' expectations for a 69,000-job rise while the unemployment rate was unchanged from the June level at 5.9 percent.
The June jobs gain was revised up to 66,000 from the 36,000 reported a month ago and left an overall impression of lackluster job markets.
The unemployment report follows several pieces of weak data such as falling consumer confidence, weaker-than-expected second quarter economic growth, and faltering manufacturing.
Jim Herrick, head of equity trading for Robert W. Baird & Co., said the latest news on top of weak manufacturing data for July was likely to weigh on stock prices.
"The buzzword now is double-dip recession, especially after weaker numbers yesterday," Herrick said.
The average workweek declined to 34 hours last month from 34.3 in June -- the lowest since a matching number last October following the shock of Sept. 11 attacks. Factory overtime fell to an average 4.1 hours in July from 4.3 a month earlier -- all predictors of lower incomes for workers.
The closely watched report is likely to raise warning lights at the Federal Reserve, economists said. Policymakers there next meet to mull interest rates on Aug. 13.
"It's nail-biting time at the Fed right now." said John Hancock chief economist William Cheney.
Hiring on Hold
"There's very little growth in the private sector and I think that it's getting awfully hard to explain this away," said economist Mark Vitner of Wachovia Securities in Charlotte, N.C. "It looks an awful lot like a jobless recovery."
The figures imply companies are keeping a tight rein on staffing levels as they monitor whether or not economic growth will pick up after a bare 1.1 percent annual rate of expansion in national economic output during the second quarter.
Analysts noted that the upward revision in June jobs was encouraging but said the data overall were likely to reinforce worry about the economy's recovery. Revised data issued by the Commerce Department earlier this week showed GDP contracted for nine months at the beginning of 2001 and grew more slowly in the early part of this year than initially thought.
The July employment report showed 86,000 people dropped out of the civilian workforce. A shrinking labor pool can help keep the unemployment rate from rising but may also imply that some people are simply too discouraged to keep looking for work.
Bond prices were modestly higher in the wake of the unemployment report, apparently on the belief it means the Fed is likely to keep interest rates on hold for some time to give the economy room to regain its footing.
Reuters and the Associated Press contributed to this report.
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