Unemployment rate dips as more workers leave labor force

Employment-seekers decline by 652,000 June, which may reflect people giving up on job-hunting and a reluctance to hire. Overall, the jobless rate falls to 9.5% from 9.7%, the Labor Department reports.

Washington —

Private employers added a smaller-than-expected 83,000 jobs in June, but the unemployment rate edged down to 9.5% as many workers dropped out of a labor market that remains very sluggish.

The Labor Department reported Friday that total payroll employment, including government workers, was down 125,000 in June, reflecting the loss of 225,000 census workers who finished their assignments.

The decrease in Census Bureau staffing was expected, but most analysts were looking for stronger job growth in the private sector, which has yet to generate momentum and looms as a major threat to the overall economic recovery. In May, private employers added just 33,000 jobs. What's more, the average hours worked in manufacturing and other industries in June declined, as did average hourly earnings.

Job gains last month were largely in low-paying industries -- leisure and hospitality, and the temporary-help industry. Manufacturing payrolls grew by 9,000, but that was much smaller than the average of 25,400 in the prior five months. And the construction industry shed another 22,000 jobs in June.

Although the jobless rate in June fell from 9.7% in May, that reflected a big drop of 652,000 people in the labor force over the month. The labor force is made up of workers and those actively looking for jobs. With the economic recovery weakening and many employers reluctant to hire, many more unemployed people may have quit looking for work, which would push down the jobless rate.

In fact, the percentage of the overall working-age population that is in the labor force fell last month to 64.7% -- near a 25-year low.

don.lee@latimes.com

Copyright © 2010, The Los Angeles Times