Job Growth Cools in July as Jobless Rate Ticks Up

employment situation july
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WASHINGTON -- U.S. employers extended their solid hiring into July by adding 209,000 jobs. It was the sixth straight month of job growth above 200,000, evidence that businesses are gradually shedding the caution that had marked the 5-year-old recovery.

July's gain was less than in the previous three months, though, and probably wasn't strong enough to intensify fears that the Federal Reserve will soon raise interest rates to curb inflation.

But the Labor Department's monthly jobs report Friday pointed to an economy that has bounced back with force after a grim start to the year and is expected to sustain its strength into 2015. Along with the consistent job growth, consumer spending is rising, manufacturing is strengthening and auto sales are up.

In early trading Friday morning, stock market indexes were mixed. The yield on the 10-year Treasury note fell, suggesting less concern about a Fed rate increase.

The unemployment rate ticked up in July to 6.2 percent from 6.1 percent as more Americans started looking for work. Most didn't find jobs, but the increase suggests that they're more optimistic about their prospects. The jobless aren't counted as unemployed unless they're actively seeking work.

Average job gains over the past six months reached 244,000 in July, the best such average in eight years.

"Job growth slowed in July after heated gains in the past three months," Sal Guatieri, senior economist at BMO Capital Markets, noted in a research note. "But hiring trends remain solid, reflecting a strengthening economy."

The pickup in hiring has yet to translate into larger paychecks for most Americans, a key factor that has hobbled the recovery. In July, average hourly earnings ticked up just a penny to $24.45. That's just 2 percent higher than it was 12 months earlier and is slightly below current inflation of 2.1 percent. In a healthy economy, wages before inflation would rise 3.5 percent to 4 percent annually.

The proportion of working-age adults who either have a job or are looking for one rose slightly in July from a 35-year low to 62.9 percent. It was the first increase in four months.

Weak pay gains are restraining the housing market, usually a key driver of growth. A measure of signed contracts to buy homes slipped in June, the National Association of Realtors said this week. That suggests that home sales will decline in coming months.

The weak pay growth suggests that "the labor market still has far to go before it is fully healed," Michael Dolega, senior economist at TD Economics, wrote in a note to clients. "Lack of wage gains leaves the Fed with a strong case for keeping rates low for the next several quarters."

Still, Friday's report echoes other data that point to an improving economy. Growth accelerated during the April-June quarter, the government said Wednesday, after contracting sharply in the first three months of the year. Last quarter's rebound assuaged fears that growth was too weak to support this year's rapid hiring.

And Friday, the government said consumer spending and income picked up in June. A separate report showed that manufacturing expanded in July at the fastest pace in more than three years as new orders surged, production rose and factories ramped up hiring.

Investors remain anxious about whether the broad economic gains will lead the Fed to raise its benchmark short-term rate sooner than expected. Such fears likely contributed to Thursday's 317-point plunge in the Dow Jones industrial average (^DJI) -- its worst day since February.

In addition to reporting July's solid gain, the government Friday revised up its estimate of the job increases in May and June by a combined 15,000.

Higher-paying jobs showed strong increases in July. Manufacturing added 28,000 jobs, the most in eight months. Construction added 22,000 and financial services 7,000, its fourth straight gain.

In the April-June quarter, the economy expanded at a seasonally adjusted 4 percent annual rate after a steep 2.1 percent contraction in the first quarter. Americans stepped up their spending, particularly on autos, furniture and other big-ticket items. Businesses also spent more on plants, office buildings and equipment.

Americans are also gradually gaining confidence in the economy, which means spending could accelerate in coming months. The Conference Board's consumer confidence index jumped to its highest level in nearly seven years in July.

-AP Economics Writer Paul Wiseman contributed to this report.

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Can you show me a model where tariffs don't end up losing money for the nation imposing them?
That model would of existed before the trade deals. You know when people still had hope.

August 03 2014 at 2:55 PM Report abuse -2 rate up rate down Reply
1 reply to Iselin007's comment

You shouldn't have any trouble.posting a link then.

August 04 2014 at 7:38 AM Report abuse rate up rate down Reply

What about the debt owed to my ancestors?

August 03 2014 at 2:46 PM Report abuse -2 rate up rate down Reply

If just about everyone is going get a negative on this thread why bother at all?

August 03 2014 at 2:41 PM Report abuse -2 rate up rate down Reply
Robert Smith

Mac has no clue about reality, he lives in utopia.

August 02 2014 at 8:44 PM Report abuse -3 rate up rate down Reply
Robert Smith

I really like Obama, it's his policies that stink.

August 02 2014 at 8:28 PM Report abuse -3 rate up rate down Reply
Robert Smith

" Mommy wake up, daddy is hungry. "

August 02 2014 at 8:16 PM Report abuse -2 rate up rate down Reply

the high-flying labor market showed no let-up in July as employers added 209,000 jobs.
The unemployment rate rose to 6.2% from 6.1%, the Labor Department said Friday, as 329,000 Americans, including many who had given up their job searches, surged back into thT labor force.

That figures to a lotal of 120,000 more jobs loss, REAL MATH.. This is just more lies Obama tells and you keep drinking the Koolaid.

August 02 2014 at 6:19 PM Report abuse -3 rate up rate down Reply
1 reply to COMMON SENSE's comment

Seriously, you can't understand the concept of a NET increase in employment and growth in the labor force? 209,000 MORE people employed; not " a total of 120,000 more jobs loss (sic)." Even if you capitalize REAL MATH and call yourself COMMON SENSE, it doesn't appear to help with comprehension. So lets simplify it. Last month one person was working, one person wanted to work but was unemployed. This month two people are working but two more people come along and want to work but can't find a job. So employment goes up by one and unemployment goes up by one. You getting the idea. 209,000 MORE people are working. And that's after 298,000 MORE people working in June, 200,000+ MORE in May, 200,000+ MORE in April. REAL MATH and COMMON SENSE. Or just go back to the Koolaid.

August 03 2014 at 7:16 AM Report abuse -1 rate up rate down Reply
1 reply to pgile's comment

Only 198,000 were private sector jobs the 209,000 was the total incuding more government hires. Until the private sector starts hiring US Born Citizens for good pay they need to cut government workers and their pensions.

August 03 2014 at 3:17 PM Report abuse -1 rate up rate down

If the government passes acts like the trade deals that due unsupected harm to millions of citizens to the extent it cause lost of income,job gaps,and lost of useable skills, especially for people 40 and over then I would say the government has an obligation to see these older workers aren't forced out or rejected for hire in the labor force using age discrimination and harrassment.

August 02 2014 at 12:28 PM Report abuse rate up rate down Reply

When the WPA was ended some people were so upset they destroyed what they had accomplished much like when people lost their manufacturing jobs.

One time I had to go through several boxes of airconditioners at Sears in the 1980's. Although the cartons containing the airconditioners were in perfect condition the contents were smashed! Either the workers were retaliating over being laid off at the factory or a temporary workforce that had replaced the workers put the smashed airconditioners in the cartons.

August 02 2014 at 12:19 PM Report abuse rate up rate down Reply
1 reply to Iselin007's comment
Tom Wilson

WPA= We Piddle Around

August 02 2014 at 6:10 PM Report abuse -2 rate up rate down Reply

Whose job was it to create the WPA? You know that program that eventually ran for 8 years?

Because of that program to put Americans back to work not only did bridges and roads get built but a later version helped record the deceased in the nation's cemeteries so people could research their ancestors.

August 02 2014 at 12:09 PM Report abuse rate up rate down Reply