Payroll growth slows dramatically in July

WASHINGTON (AP) -The nation's payroll growth slowed dramatically in July with a paltry 32,000 jobs being added- a potentially troubling sign that the rough patch the economy hit in June was no aberration.


The unemployment rate, however, dipped down a notch to 5.5 percent last month, from 5.6 percent in June, the Labor Department reported Friday. The new jobless rate was the lowest since October 2001.


The payrolls figure and the unemployment rate can sometimes go in different directions because they are derived from two separate statistical surveys.


Economists, however, look more closely at the payroll figure as a better barometer of the health of the jobs market. The 32,000 net jobs added in July represented the smallest gain in hiring since December and followed a revised gain of just 78,000 in June, even less than previously reported. May's payrolls also were revised down to show a gain of 208,000.


Analysts were expecting the economy to add anywhere from 215,000 to 247,000 jobs in July. They were predicting the jobless rate to hold steady at 5.6 percent.


Federal Reserve Chairman Alan Greenspan, appearing before Congress last month, said that the economy hit a "soft patch" in June. But he expressed confidence that it would be short-lived.


President Bush and his Democratic rival, John Kerry, joust frequently over the health of the economy and the availability of jobs - prominent issues in the presidential campaign. Kerry says Bush's economic policies aren't working and squeeze the middle class. Bush insists his tax cuts have helped the economy rebound and that making those tax cuts permanent will spur more job creation. He's counting on that to help him win another four-year term in November.


Since Bush took office in January 2001, the economy has lost a net 1.1 million jobs.


While the economic recovery is on a solid path, the labor market recovery has been spotty.


Greenspan, in his appearance before Congress last month, noted that businesses have not completely abandoned their cautionary stance toward hiring.


Still, with the job situation uneven, Federal Reserve policy-makers have leeway to raise short-term interest rates gradually to head off any inflation problems, economists say. The Fed meets next week; economists expect policy-makers to boost rates by one-quarter percentage point. On June 30, the Fed increased interest rates for the first time in four years, raising a key rate to 1.25 percent from a 46-year low of 1 percent.


Even with the disappointing job growth in July, it still marked the 11th month in a row that the economy added jobs.


And, in an encouraging note, manufacturers, after cutting 1,000 jobs in June, added 10,000 in July.


But retailers shed jobs as did financial services firms and hospitality companies.


Separately, consumer confidence surged in August to its highest level since the beginning of the year despite fresh terror threats and surging oil prices.


The AP-Ipsos consumer confidence index climbed to 104.8 in August, up from 92.0 in July, led by consumers' perceptions of their own finances and optimism about the future.


Comments

Use the comment form below to begin a discussion about this content.

Sign in to comment