WASHINGTON -- American businesses added fewer jobs than expected in June, the strongest evidence yet that the Federal Reserve is succeeding in its campaign to keep the economy from overheating. The unemployment rate fell to near a 30-year low of 4 percent. Markets were lifted by the news.
''This is confirmation that the economy is giving up some of its forward momentum,'' said economist Ken Mayland of ClearView Economics. ''Job growth is moderating, but the labor market remains healthy.''
Businesses added 206,000 jobs last month after cutting 165,000 positions in May, the Labor Department reported Friday.
June's gain in private-sector jobs was offset by a loss of government jobs, including the departure of 190,000 temporary census workers. As a result, total employment including government workers rose by only 11,000, the weakest growth in four years. Many analysts were expecting total employment to grow by 293,000 jobs.
On Wall Street, stocks rose as investors considered the report heartening new evidence that the Fed's interest-rate increases -- six of them over the last year -- are working to slow economic growth to a more sustainable pace. The Dow Jones industrial average gained 154.51 points to close at 10,635.98 and the Nasdaq was up 62.63 points to 4,023.20. Bond prices rose, too.
So far this year, businesses have added an average of 177,000 jobs a month, compared with 202,000 a month for all of 1999, government analysts say.
''It's clear that we are not creating jobs at the same rate, but it's still a healthy pace,'' said Labor Secretary Alexis Herman. ''I think it's fair to say that we are seeing signs of moderation in the economy.''
Many economists said the tame employment report increases the odds that the Fed will leave interest rate unchanged at its Aug. 22 meeting, just as it did at its June meeting.
''This report presents the clearest evidence yet that the economy has slowed in response to the Federal Reserve's interest rate increases ... and hopefully will give the Fed a reason to hold off again at its next meeting,'' said Martin Regalia, chief economist for the U.S. Chamber of Commerce.
But others weren't as sure.
''The Fed could pull the trigger again ... in August just as easily as they could stand down,'' said John Hancock economist Oscar Gonzalez. Economists noted there will be plenty of economic data out between now and then, including another job report.
In good news for workers, the nation's jobless rate edged down to 4 percent in June from 4.1 percent the month before -- matching many analysts' expectations. In April, the unemployment rate hit a 30-year low of 3.9 percent.
President Clinton, hoping to keep a Democrat in the White House, pointed to the employment report as evidence that his administration's economic policies are working.
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