New-Jobs Total Grew Slowly In Latest Month --- But Unemployment Fell, Heating Up the Debate On Cut in Interest Rates
WASHINGTON -- The Labor Department's new jobless figures pose a difficult problem for government policy makers.</br></br>The numbers show the economy is expanding at a painfully sluggish rate, with only 40,000 new jobs created in June. Manufacturing employment fell by 30,000 during the month.</br></br>But at the same time, the unemployment rate among civilians remained at historic lows, dropping to 5.2% in June from 5.3% in May. Many economists, including those at the Federal Reserve, believe joblessness can't drop any lower without sparking increased inflation.</br></br>As a result, the new numbers aren't likely to prompt the Federal Reserve to ease credit. Fed officials wouldn't comment on the numbers for the record. But it was clear they saw little reason in the report to change their course and move toward lower short-term interest rates.</br></br>"This is the classical mixed bag," said Robert Dederick, chief economist at Northern Trust Co. in Chicago. "We have a slower economy but one that is growing about as fast as we can afford to."