US employers added 146,000 jobs in June, below Wall Street forecasts, but the unemployment rate fell to its lowest point since September 2001 as fewer people joined the labour force.
The Labor Department revised up job growth in April and May to 292,000 and 104,000, respectively - boosting the two-month count by 44,000 jobs.
June's employment growth came in below analyst expectations for 188,500 new jobs in the month. But the decline in the unemployment rate to 5% was a surprise, since Wall Street had expected it to hold at 5.1%. The drop was mostly due to a paltry 1,000 increase in the workforce, which includes those looking for work as well as those who have jobs.
Factory payrolls shrank for the fourth straight month as car assembly and parts plants cut back on production. A glut of inventories has prompted many car makers to slow production lines until demand can catch up. Some 96,000 manufacturing jobs have been lost since August 2004.
While 18,000 workers were hired in the construction industry last month, most of June's employment growth came in the service sector. Professional and business services jobs rose 56,000, education and health services were up 38,000 and leisure and hospitality payrolls grew 19,000.
In a sign of underlying weakness, the length of the average workweek was 33.7 hours, unchanged from May's downwardly revised length. The factory workweek was also unchanged at 40.4 hours, while overtime held at 4.4 hours. Employers typically increase the length of the work week before taking on new workers, so a lack of growth in that area can mean lower hiring ahead.
