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US economy still struggling to create jobs

The U.S. economy generated a paltry 80,000 jobs in June, showing that the nation's job-creation machine is stumbling even as voters' attitudes about the economy begin to gel ahead of the November election.

The unemployment rate is unchanged at 8.2 percent, the Labor Department reported Friday.

Job-creation has stumbled since March amid worries about consumer spending, the debt crisis in Europe and stagnation in Congress.

"There's just not a lot of momentum in the economy," said Sam Bullard, an economist at Wells Fargo  in Charlotte, North Carolina.

Mitt Romney, the Republican challenger to President Barack Obama, is focusing his campaign on the weak jobs market that has dogged the presidency.

"The president's policies have not gotten America working again and the president is going to have to stand up and take responsibility for it," Romney said at a news conference in New Hampshire after the jobs report was released.

Later, at a campaign stop in Poland, Ohio, Obama told the crowd in the crucial swing state that while private sector job creation was headed in the right direction, more needed to be done to help the economy grow faster and create more jobs.

"I want to get back to a time when middle class families and those working to get to the middle class have some basic security. That's our goal," he said.

Related story: Just four more jobs reports until the election

The details of the report were unsettling. The government said the economy created 1,000 fewer jobs during April and May than previously estimated.

The somber report might push the Federal Reserve closer to taking new actions to lower borrowing costs to encourage companies to increase hiring. Analysts polled by Reuters expected an increase in payrolls of 90,000 jobs.

Debt woes have bogged down much of Europe, sending some countries into recession. The eurozone crisis in turn has dulled economic growth around the world from China to Brazil. A survey on Monday found U.S. manufacturing contracted for the first time in nearly three years in June.

Europe is not the only worry weighing on the U.S. outlook. Washington plans enough belt-tightening at the start of 2013 to easily send the economy into recession. Cautious observers wonder if lawmakers can avoid this "fiscal cliff."

"Firms are saying, 'Is there really a reason to ramp up hiring right now?'," said Bullard.

Job creation averaged 75,000 per month during the second quarter, compared with an average increase of 226,000 in the first quarter. Part of the slowdown could be because mild weather led companies to boost hiring in the winter at spring's expense.

But recent weakness in everything from retail sales to business sentiment suggests something more fundamental is at play.

"We're not expecting things to take off in the second half of the year," said Sara Klein, an economist at Moody's Analytics in West Chester, Pennsylvania. "Weather wasn't the only factor." 

Until recently, the United States had been a relative bright spot in the global economy, especially in manufacturing. Most economists still expect lackluster growth over the rest of 2012 rather than a slip toward recession.

But economic weakness abroad has lately become a formidable hurdle, as Obama has acknowledged, and global policymakers are acting like a storm is brewing.

China, the European Central Bank and the Bank of England all eased monetary policy on Thursday, raising speculation they had coordinated their action.

The Fed eased policy further last month, but the recent run of weak data has fueled speculation the U.S. central bank could deliver more stimulus when its next meeting concludes on Aug. 1.

Even though June's pace of hiring was decidedly weak, the Fed might not want to unveil bold new measures now because the real storm could be months down the road.

"Hiring isn't as strong as earlier this year ... but not to the point where you see obvious need for Fed action," said Cooper Howes, an economist at Barclays in New York.

Reuters contributed to this report.

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