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The job market's never-ending vacation

July 8, 2011: 11:28 AM ET

The few things that had been going right in the job market -- temporary hiring, average hours worked -- have reversed course.

FORTUNE -- They say things move slower during the summer. But judging by today's monthly report on the state of the U.S. jobs market, it looks as if the economy may take an extended vacation.

For the second month in a row, it added only a tiny number of jobs – 18,000 in June. That's no better than the 25,000 generated during the previous month. And figures for both months are far below the roughly 125,000 jobs a month needed just to keep up with population growth.

It's hard to find a silver lining in today's report. Unemployment edged up to 9.2% in June. This could be viewed as good news, since a bump up in the jobless rate sometimes signals that more people are feeling confident about the economy and are actively looking for work. But that's far from what's been happening. Unemployment might have ticked up, but the labor force dropped by 272,000. Meanwhile, the private sector added a meager 53,000 jobs and government jobs plummeted.

What's really worrying is that the few things that had been going right have suddenly given way. Temporary hiring had helped drive the economic recovery, which economists took as a positive sign that companies would eventually hire more full-time workers. But June's report shows a 12,000 decline in temp hiring, marking the third month of declines (down by 19,000 since April). This suggests that, "there could be even worse to come," says Paul Ashworth of Capital Economics.

What's more, average weekly hours worked ticked back down to 34.3 from 34.4 in May – further deflating hopes that employers could start hiring more 40-hour full-time workers.

"In sum, May and June are the beginning of a weak employment trend that should stretch through the summer," says Steven Blitz, economist with ITG Investment Research.

Even if the jobs picture improves by the fall, it's hard to believe why the momentum won't stall again. After all, it has very much been a spotty recovery. In early 2010, employment began growing faster than population growth. Then, amid huge debt problems in parts of Europe and as government stimulus spending waned, it stalled. By late 2010 and early this year, things started picking up again only to stall again in recent months amid higher food and fuel prices and Europe's ongoing fiscal turmoil.

And at least so far, it appears government officials have no fix to give the economy a needed boost. Certainly policymakers could let it heal on its own, but it's hard not to also wonder if someone should start telling the economy it just can't take vacations whenever it wants.

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About This Author
Nin-Hai Tseng
Nin-Hai Tseng
Writer, Fortune

Nin-Hai Tseng covers economics and finance. Before joining Fortune, Tseng was a reporter at The Orlando Sentinel and a public affairs associate at GE. She holds an MPA from Columbia University and a BS in Journalism from the University of Florida. She lives in New York City.

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