Reuters reported that US private payrolls rose only modestly in June and overall employment fell for the first time this year as thousands of temporary census jobs ended, indicating the economic recovery is failing to pick up steam.

The employment figures from the US Labor Department followed a raft of weak reports this week on consumer spending, housing and factory activity that have heightened fears the economy could slip back into a recession. But even though private sector hiring in June was well below levels needed to bring down unemployment on a sustained basis, analysts said the figures were not consistent with an economy on the brink of another recession.

Ms Julia Coronado, an economist at BNP Paribas in New York, said that "We are still on track for a fairly moderate recovery. There have been some concerns that maybe we are heading for a double dip. The report eases those concerns in the sense that we are still creating private sector jobs."

Private hiring rose by 83,000 after adding only 33,000 jobs in May. Total non farm employment actually dropped 125,000 as the government laid off 225,000 temporary census workers. The unemployment rate fell to 9.5%, the lowest level since July 2009, from 9.7% in May, but only because a flood of jobless workers gave up their employment search.

Economists polled by Reuters had expected private employment to grow by 112,000 jobs, although some had scaled back their projections in recent days. The jobless rate was expected to edge up to 9.8%.

The Commerce Department said that factory orders in May suffered their biggest tumble since March of last year.

Analysts blamed the moderation in the recovery from the longest and deepest recession since the 1930s on the sovereign debt crisis in Europe, which is expected to stunt growth in the region as governments tighten belts to cut budget deficits.

(Sourced from www.reuters.com)