This was the first increase in the unemployment rate since President Clinton took office and comes on the eve of the Group of Seven meeting in Tokyo next week. Mr Clinton intends to push global economic growth and job creation as his first concern.
The latest rise in unemployment was largely due to job losses in manufacturing, some caused by federal defence cuts. Non-farm employment, which had been forecast to grow by 140,000 in June, produced a gain of only 13,000.
The dollar fell as the figures were announced but later regained ground. The US currency ended 0.35 pfennigs lower against the German mark at DM1.6935. The pound rose a quarter of a cent to dollars 1.5095.
President Clinton played down the importance of the latest unemployment statistics as he confirmed plans to shut 130 military bases around the US, with federal spending to minimise job losses. 'This thing is moving forward in fits and starts and we're doing a pretty good job of creating jobs,' he said.
The return to 7 per cent surprised many analysts. 'I don't believe that the economy is as weak as the June figures would indicate,' said Edward Yardeni of the New York investment firm, C J Lawrence.
Altogether, 53,000 jobs were shed in the US manufacturing sector last month, bringing total losses over four months to 187,000. The most dramatic contractions occurred in the aircraft and electronic industries.
The increase in the unemployment rate followed a string of disappointing economic indicators earlier in the week, including a sudden plunge in sales of new homes and a significant dip in manufacturing activity.
On a brighter note, job numbers continued to rise slightly in services, notably in retail and hotels.
The disappointing employment figures helped boost the gold price, which closed dollars 7.75 higher on the day at dollars 388.25 an ounce.
The pound had another good day, despite weakening slightly towards the close. It ended 0.2 points higher against a basket of currencies at 81.1 per cent of its 1985 value. Britain's reserves of gold and foreign currency rose an underlying dollars 64m last month to reach a total of dollars 41.9bn.Reuse content