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Job Growth Slowed, but Economists Say U.S. Not in Recession

While still in positive territory, June marked another month of feeble gains in employment with the addition of 80,000 jobs, according to the ""Labor Department"":http://www.dol.gov/. This was followed by 77,000 jobs added in May and 68,000 in April. The second quarter growth marks a major slowdown compared to the first quarter when monthly job growth averaged 226,000 compared to 75,000 for this second quarter.


While the second quarter gains look bleak in comparison to first quarter growth, ""Capital Economics"":http://www.capitaleconomics.com/ said June's employment report is further evidence that the U.S. economy has lost momentum, but it doesn't mean the recovery has come to a complete halt.

""The longer jobs growth stays in this subdued range, the less likely it is that the slowdown is due to the temporary effects, such as unusual weather patterns and the previous rise in


gasoline prices, and the more likely it is due to more persistent factors, including uncertainties caused by overseas events and the fiscal position at home,"" wrote economist Paul Dales in the Capital Economics report.

""IHS Global Insight"":http://www.ihs.com/products/global-insight/index.aspx also released a commentary on the report. Nigel Gault, chief economist for the analytics company, explained why the disappointing numbers do not point towards a recession.

""If the economy were tipping into recession, you would not expect to see the workweek edging higher, temporary jobs rising slightly faster, and hourly earnings rising more quickly â€" all of which happened in June. But firms are being very careful about adding new full-time employees. Uncertainties over the strength of global growth, the Eurozone crisis, the fiscal cliff and the November elections are giving plenty of reasons for caution,"" said Gault.

In contrast to the jobs reports, ""Fannie Mae"":http://www.fanniemae.com/portal/index.html Chief Economist Doug Duncan pointed out that news from the housing front has been relatively positive, with housing activity running ahead of last year's pace, but he still indicated uncertainty on the sustainability of the good news.

""It is unclear how long this encouraging trend can persist given the backdrop of ongoing weakness in the labor market,"" said Duncan.

While job gains have been less than 100,000 over the last three months, Gault said they are expecting job creation to be in the 100,000-150,000 region per month in the second half of the year.

About Author: Esther Cho


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