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Stocks plunge on weak hiring
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WASHINGTON - Hiring slowed to a near-standstill last month, raising doubts that the economy will rebound in the second half of the year.

The report baffled economists who had predicted much stronger job creation. And it escalated a debate in Washington over how to spur hiring and energize the economy while also cutting federal spending.

Just 18,000 net jobs were created in June, the fewest in nine months. The unemployment rate rose to 9.2 percent, the highest rate of the year, the Labor Department said Friday.

Stocks plunged once the report was released. The Dow Jones industrial average sank more than 100 points in afternoon trading. Broader indexes also dropped.

For President Barack Obama, the sputtering job market represents a threat 16 months before his re-election bid.

"Our economy as a whole just isn't producing nearly enough jobs for everybody who is looking," Obama acknowledged in a speech in the White House Rose Garden.

Obama used the dismal job data to press Congress to raise the government's borrowing limit. He also said Congress could strengthen the economy by passing three free-trade accords, approving government projects to create construction jobs and extending a Social Security tax cut.

But Republicans oppose an increase in the $14.3 trillion borrowing limit without steep cuts in spending. And they said the report reinforces their argument that tax increases would stunt job growth and shouldn't be part of any deal.

Friday's report suggested that a slowdown that struck the economy in the spring and curtailed job creation may be more than brief.

"June's employment report doesn't have a single redeeming feature," said Paul Ashworth, an economist at Capital Economics. "It's awful from start to finish."

Two years after the recession officially ended, companies are adding fewer workers despite record cash stockpiles and healthy profit margins.

A result is that more people are giving up looking for work. More than a quarter-million people stopped their job searches in June. That kept the unemployment rate from rising even further. When laid-off workers stop looking for work, they are no longer counted as unemployed.

Including discouraged workers and those working part time, but who would prefer full-time work, the "under-employment" rate jumped from 15.8 percent to 16.2 percent.

Businesses added just 57,000 jobs last month. That was the fewest in more than a year. Governments cut 39,000 jobs. Over the past eight months, federal, state and local governments have cut a combined 238,000 positions.

June was the second straight month of feeble job growth. And the government on Friday revised down the number of jobs the economy added in May, from 54,000 to 25,000.

Companies have pulled back sharply on hiring after adding an average of 215,000 jobs per month from February through April. The economy typically needs to add 125,000 jobs per month just to keep up with population growth. And at least twice that many jobs are needed to bring down the unemployment rate.

Unemployment has topped 8 percent for 29 months, the longest streak since the 1930s. At the same point after the previous three recessions, unemployment averaged just 6.8 percent.