WASHINGTON — The U.S. economy is growing too slowly to pull the job market out of a slump, according to data released Thursday that suggests June will be another weak month for hiring.
Applications for unemployment benefits stayed above a level generally considered too high to lower the unemployment rate, according to the Labor Department’s weekly report. And the annual growth rate for the January-March quarter, as measured by gross domestic product, was unchanged at a tepid 1.9 percent, the Commerce Department said.
The two reports added to the picture of an economy that is faltering for the third straight year after a promising start. Job growth has tumbled, consumers are less confident and Europe’s financial crisis has dampened demand for U.S. exports.
Most economists don’t see growth accelerating much from the first-quarter pace, although some are hopeful that lower gasoline prices could help lift consumer spending over the summer.
Growth of around 1.9 percent typically generates roughly 90,000 jobs a month. That’s considered too weak to lower the unemployment rate, which was 8.2 percent last month.
Slow improvement in the economy threatens President Barack Obama’s re-election hopes. He is likely to face voters with the highest unemployment rate of any president since the Depression.
The Federal Reserve last week downgraded its outlook for 2012 growth. The Fed now predicts the economy will grow between 1.9 and 2.4 percent this year - half a percentage point lower than its forecast in April.
Hiring isn’t likely to improve in June, based on the level of people applying for unemployment benefits.
Weekly applications fell to a seasonally adjusted 386,000, the Labor Department said. But they have climbed nearly 5 percent in the past two months.
When applications are above 375,000, it generally means that hiring isn’t strong enough to rapidly lower the unemployment rate.
Economists are predicting 100,000 jobs were added in June and no change in the unemployment rate, according to a survey by FactSet. The government will issue the June employment report next Friday.
Joblessness “claims are still too high and show that employment growth is slowing and no progress is being made,” said Jennifer Lee, an economist at BMO Capital Markets.
Employers added an average of only 73,000 jobs per month in April and May after averaging 226,000 a month in the first three months of the year.
The report on the first quarter’s economic growth showed that U.S. corporate profits fell, the first quarterly decline since the final three months of 2008.
U.S. corporations earned less profit overseas, the report said. That’s likely a result of Europe’s economic woes and slowing growth in China and India.
The number of people continuing to receive benefits, meanwhile, rose to 5.9 million in the week ended June 9, the latest data available. That’s about 70,000 more than the previous week.
Other recent indicators have painted a mixed picture of the economy.
A closely watched private survey released this week showed consumer confidence fell in June for the fourth straight month. The Conference Board said worries about the job market outweighed lower gasoline prices and steady improvement in the housing market.
Americans have received little in the way of pay raises this year, with wage growth trailing inflation. That has started to slow their growth in spending. Retails sales have barely grown in the past two months.
Less growth in consumer spending has also hurt U.S. manufacturing activity, a leading economic driver since the recession ended. Factories produced less in May than April, the Federal Reserve said this month. Automakers cut back on output for the first time in six months.
There have been hopeful signs.
Gasoline prices have plummeted since peaking in April near $4 per gallon. The average national price for a gallon of gas was $3.37 on Thursday, according to auto club AAA, Wright Express and the Oil Price Information Service. In Arkansas the average price Thursday was $3.14.
Business, Pages 29 on 06/29/2012