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US jobs report: a cold blast of fear

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Damian Dovarganes/AP/File

(Read caption) In this Thursday photo, job seekers gather for employment opportunities at the 11th annual Skid Row Career Fair at the Los Angeles Mission in Los Angeles. US employers created 69,000 jobs in May, the fewest in a year, and the unemployment rate ticked up, fanning fears of a slowdown.

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The chill winds of fear and economic uncertainty, centered in Europe, are beginning to buffet the United States.

Employers are slowing down their hiring. Consumers have turned cautious. It's not the present state of affairs that's got them worried, it's what lies ahead: the potential breakup of the eurozone, the uncertainty around US elections, and the coming expiration of US tax cuts.

"We hear that up and down the food chain," says Jim John, chief operating officer of Beyond.com, an online career network based in King of Prussia, Pa., for employers and job-seekers. "Employers are pulling in their horns."

The latest employment report, released Friday, confirm the jitters. Employers added only 69,000 jobs in May, the Department of Labor reported, the smallest increase in a year and less than half what a consensus of economists had forecast. Employment gains for the two previous months were also adjusted downward by a combined 49,000 jobs. The unemployment rate ticked up from 8.1 percent to 8.2 percent.

For the past two months, economists have speculated that the weaker-than-expected jobs numbers were a kind of "payback" for the unusually strong employment gains in the winter, caused by unusually warm weather that boosted everything from construction work to car sales. Now, however, they're acknowledging that other factors are at work.

"It does now appear that the global slowdown, and events in Europe particularly, are beginning to have a more marked impact on the US economy," writes Paul Ashworth, chief US economist at Toronto-based Capital Economics, in an analysis of Friday's numbers.

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