WASHINGTON - The nation's unemployment rate held steady at 5.6 percent in June for a third straight month as more Americans resumed their job searches with mixed results. Employers added roughly 112,000 new positions, less than half the growth that economists were anticipating.
June's payroll increase, nonetheless, was the 10th straight month of gains, the Labor Department reported Friday. In advance of the report, analysts had forecast a rise of at least 250,000 in payroll employment as another sign of renewed strength in the labor market. Payrolls in April and May also were revised down slightly from the big gains previously reported by the Bureau of Labor Statistics.
The overall, seasonally adjusted civilian unemployment rate has stayed at 5.6 percent all year, except for March, when it rose to 5.7 percent. Economists expect the rate to slowly decline throughout the year. But job growth first must absorb all of the people returning to the pool of available workers. Last month, the labor force grew by 305,000.
Jobs and the economy are major issues in this election year, and President Bush has been counting on continued employment growth to boost his re-election prospects. One obstacle he faces is convincing Americans that their job prospects are truly brightening.
Evidence of a strengthening labor market and the specter of new inflationary pressures prompted the Federal Reserve on Wednesday to raise interest rates for the first time in four years. The quarter-point increase was the first change since the funds rate was cut to a 46-year low of 1 percent in June 2003.
That had marked the 13th Fed rate cut in a series that began back in January 2001 as the central bank battled to jump-start an economy staggered by a series of blows, from a plunging stock market and the 2001 recession to terrorist attacks and two wars.