Jobless rate drops to 9.5 percent; economy loses 125,000 jobs

Sluggish job growth continued in the U.S. economy in June as businesses added 83,000 jobs.

The economy actually lost 125,000 jobs for the month, but that was the result of a loss of 225,000 temporary workers at the Census, according to the report released Friday by the Labor Department.

Private businesses added 83,000 workers — fewer than the 110,000 to 120,000 private analysts had forecast.

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The unemployment rate fell from 9.7 percent to 9.5, but that reflected changes in the number of people actively searching for work.

President Barack Obama and Democrats emphasized that the June numbers showed the economy added jobs for a sixth straight month. They contrasted those figures with early 2009, when Obama entered office and the economy was losing more than 600,000 jobs every month.

"Make no mistake, we are headed in the right direction ... but we are not headed there fast enough for most Americans," Obama said Friday.

House Republicans quickly issued press releases blasting the Obama administration over the lost jobs.

"This jobs report is a disappointment for every family and every small business who heard President Obama declare just weeks ago that our economy is 'getting stronger by the day,' " GOP Leader John Boehner (Ohio) said in a statement.

The Labor report said the labor force participation rate fell by 0.3 percent for the month, and the number of discouraged workers no longer looking for employment also grew.

The sluggish job numbers come amid worries the U.S. and global economies could be threatened by a double-dip recession as the midterm elections in Congress rapidly approach.

Pending homes sales unexpectedly dropped by 30 percent in May, much worse than expected, according to the National Association of Realtors. Meanwhile, the manufacturing sector continued to grow in June, but at a slower rate than the previous month, the Institute for Supply Management reported Thursday.

The economic data is likely to play into a debate in Congress and across the world over whether governments should continue to spur on their economies with stimulus or focus on deficit reduction.

Obama and his economic team have urged world leaders and members of Congress to continue efforts to stimulate the economy.

Congress adjourned this week without extending unemployment benefits, which some economists say would provide a small boost to the economy.

Rep. Carolyn Maloney (D-N.Y.), chairwoman of the Joint Economic Committee, emphasized that the 83,000 jobs created by private business was up from the previous month and shows the economy is headed in the right direction. But she said it's critical for Congress to approve the unemployment benefits extension because of the help it would provide the unemployed and the stimulus it would add to the economy.

She charged Senate Republicans with holding up action on the legislation and putting the economy at risk.

"Economists say one of the most effective ways to put money into our economy is unemployment benefits," she said in an interview.

Most Republicans and Democratic Sen. Ben Nelson (Neb.) opposed Senate legislation extending the benefits because the $33 billion cost was not offset with other spending cuts.

The loss of benefits has affected 1.2 million people so far, according to an estimate by the National Employment Law Project.

The number of long-term unemployed, who have been jobless for at least 26 weeks, remained unchanged at 6.8 million, the Labor report said.

States provide up to 26 weeks of unemployment benefits. The extension would have provided as much as another 73 weeks in the states hit hardest by the recession.

This story was posted at 8:47 a.m. and updated at 9:53 a.m.