US jobs market at near-standstill

US stocks dropped sharply as markets opened last night, wiping out the previous day's gains, after disappointing data on unemployment dashed hopes that the economic recovery might be regaining speed.

Job creation in the US slowed to a near-standstill last month, with employers adding the fewest jobs in nine months. The unemployment rate rose to 9.2 per cent.
The US labour department said the economy generated only 18,000 net jobs in June. And the number of jobs added in May was revised down to 25,000.
High gas prices and supply-chain disruptions stemming from the Japan crisis, plus the weak housing market have slowed the economy.
Average hourly wages declined last month and after-tax incomes, adjusted for inflation, have been flat this year.
Businesses added the fewest jobs in more than a year and governments cut 39,000 jobs.
The Dow Jones Industrial Average fell 109.21 points (0.86 per cent) to 12,610.28 in the first 20 minutes of trading.
The broader S&P 500 shed 13.26 points (0.98 per cent) to 1339.96, while the tech-heavy Nasdaq Composite tumbled 27.49 points (0.96 per cent) to 2845.17.
The sell-off came after the US Labor Department reported that the American economy created a paltry 18,000 jobs in June, pushing the unemployment rate up to 9.2 per cent and signalling that US growth stayed very weak during the entire second quarter.
The report was a letdown for investors who had hoped the US economy was getting back on track after being bruised by disruptions from the Japan earthquake and a surge in commodities prices earlier this year.
"Today is going to be a rough day for markets," said Jason Schenker, head of Prestige Economics.
"Light summer trading volumes, coupled with a very disappointing report and misplaced expectations, are likely to yield a lot of red on the screen today," he said.
Caterpillar, a maker of mining and construction equipment whose shares are seen as an economic bellwether, had dropped 1.5 per cent as of midnight (AEST), while General Electric was down 1.7 per cent.
Financial stocks also took a beating, with JPMorgan Chase down 1.5 per cent and Bank of America down 1.7 per cent.
Bond prices rose sharply as nervous investors flocked to US government debt, traditionally seen as a safe-haven investment.
The jobs figures show hiring has slowed sharply in the past two months. The economy added an average of 215,000 jobs per month in the previous three months.
The US economy typically needs to add 125,000 jobs per month just to keep up with population growth. And at least twice that many jobs are needed to bring down the unemployment rate.
The economy and job market are remarkably weak two years after the recession officially ended. Unemployment has topped 8 percent for 29 months, the longest streak since the 1930s.
Unemployment has never been so high so long after a recession ended. At the same point after the previous three recessions, unemployment averaged just 6.8 percent.
The number of unemployed workers rose almost 175,000 to 14.1 million, pushing up the unemployment rate.
Additional reporting: AFP

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