Reuters reported that US employment growth ground to a halt in June, with employers hiring the fewest number of workers in nine months, dousing hopes the economy would regain momentum in the second half of the year.

The Labor Department said that non farm payrolls rose only 18,000, the weakest reading since September 2011, well below economists' expectations for a 90,000 rise.

The unemployment rate climbed to a six month high of 9.2%, even as jobseekers left the labor force in droves, from 9.1% in May.

Mr Pierre Ellis senior economist at Decision economics in New York said that "The message on the economy is ongoing stagnation. Income growth is marginal so there's no indication of momentum.

US stock index futures fell sharply on the data, while US bond prices rose. The dollar rose against the euro. The government revised April and May payrolls to show 44,000 fewer jobs created than previously reported. The report shattered expectations the economy was starting to accelerate after a soft patch in the first half of the year. It could prompt calls for the Federal Reserve to consider further action to help the economy, but Fed officials have set a high bar. The US central bank wrapped up a USD 600 billion bond buying program last week designed to spur lending and stimulate growth.

Mr Tom Porcelli chief economist at RBC Capital Markets in New York said that "This confirms our view that the Fed will continue to keep rates on hold into 2012 and if weak employment continues it will be pushed out even further."

Hopes were high that the economy was starting to find firmer ground as motor vehicle manufacturers ramped up production and gasoline prices descended from their lofty levels. Economic activity in the first six months of the year was dampened by rising commodity prices and supply chain disruptions following Japan's devastating earthquake in March 2011.

Signs the labor market is struggling is a major blow for the Obama administration, which has struggled to get the economy to create enough jobs to absorb the 14.1 million unemployed Americans. The economy is the top concern among voters and will feature prominently in President Barack Obama's bid for reelection next year. So far, the economy has regained only a fraction of the more than 8 million jobs lost during the recession.

(Sourced from www.reuters.com)