Unemployment rate dips, economy adds 117K jobs (AP)

By CHRISTOPHER S. RUGABER, AP Economics Writer Christopher S. Rugaber, Ap Economics Writer – 25?mins?ago

WASHINGTON – Hiring picked up slightly in July and the unemployment rate dipped to 9.1 percent. The modest improvement may ease fears of another recession, but it wasn't enough to prevent another wild day of trading on Wall Street.

Employers added 117,000 jobs last month, the Labor Department said Friday. The job figures were better than the past two months, which were also revised higher.

Retailers, factories and health care firms were among the many industries that added workers. Even government job cuts weren't that bad after considering the bulk of them were caused by the temporary shutdown in Minnesota, which has since ended.

The brighter outlook on hiring sparked a brief stock market rally one day after the Dow Jones Industrial Average lost 500 points. But after gaining 171 points after the market opened, the Dow erased those gains and fluctuated throughout the day. Investors seemed focused on Europe's response to its debt crisis.

The jobs report beat most economists' expectations. But other recent economic data show the U.S. economy remains weak and is not generating enough jobs to lower unemployment rate.

The annual rate of growth for the first half of the year was less than 1 percent. Consumers cut back on spending in June for the first time in 20 months, burdened by higher gas prices and stagnant wages. Manufacturers are barely growing.

At least 250,000 net new jobs per month are needed to rapidly reduce unemployment. The rate has topped 9 percent in every month except two since the recession officially ended in June 2009.

"This pauses the conversation on the U.S. slipping back into recession, it does not end the conversation," said Tom Porcelli, chief U.S. economist at RBC Capital Markets.

President Barack Obama used the modest job gains to press Congress to extend a Social Security tax cut enacted this year that put an extra $1,000 to $2,000 in most workers' pockets. He also called for a renewal of emergency unemployment benefits, which provide up to 99 weeks of support.

The tax cuts and extra benefits are scheduled to expire at the end of this year. Economists have cautioned that the end of the two programs could weaken economic growth in 2012.

In July, businesses added 154,000 jobs across many industries. Governments cut 37,000 jobs last month, the ninth straight drop. Still, 23,000 of those losses were almost entirely because of the shutdown of Minnesota's state government.

The government revised the previous two months' totals to show hiring wasn't as weak as first estimated.

The economy added 53,000 in May, up from an earlier estimate of 25,000, and 46,000 in June, up from 18,000. June's total was still the weakest in nine months.

"These numbers are not great," said Ian Shepherdson, an economist at High Frequency Economics, in a note to clients. "But they are a long way from recession territory."

Hiring in July was broad-based. Manufacturers added 24,000 jobs in July, as auto companies laid off fewer workers in July than usual. Retailers hired a net total of 26,000 employees. Employment in health care grew 31,000. Hotels, restaurants, and other leisure and hospitality companies added 17,000.

The unemployment rate fell from 9.2 percent in June partly because some unemployed workers stopped looking for work. That means they are no longer counted as unemployed.

As a result, the number of unemployed people fell to 13.9 million, down from 14.1 million. Still, that's nearly double the total before the recession.

The participation rate, which measures the percentage of people working or searching for jobs, fell to 63.9 percent, the lowest in 27 years.

Workers did see some pay gains last month. Average hourly wages rose 10 cents to $23.13.

The number of people working part time who would prefer full-time work declined, while those who've given up looking increased. Including both groups, the under-employment rate declined to 16.1 percent from 16.2 percent.

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Applications for unemployment aid drop below 400K (AP)

By CHRISTOPHER S. RUGABER, AP Economics Writer Christopher S. Rugaber, Ap Economics Writer – Thu?Jul?28, 10:58?am?ET

WASHINGTON – The number of people seeking unemployment benefits dropped last week to the lowest level since early April, a sign the job market may be healing after a recent slump.

The Labor Department said Thursday that weekly applications fell 24,000 to a seasonally adjusted 398,000. That's the first time applications have fallen below 400,000 in 16 weeks.

The four-week average, a less volatile measure, dropped to 413,750, the lowest since the week of April 23.

Stocks rose after the report was released.

Economists cautioned that the lower level only reflects one week of data and that doesn't necessarily signal a trend.

The drop "is clearly good news," said Joshua Shapiro, an economist at MFR Inc. Still, "we would prefer to see further data before concluding that the earlier downtrend in claims is being re-established."

Separately, the National Association of Realtors said more people signed contracts to buy homes in June for the second straight month. But the increase was not enough to signal a rebound in the weak housing market.

The Realtors group said its index of sales agreements for previously occupied homes rose 2.4 percent in June to a reading of 90.9. The gain and an 8.2 percent increase in May did not make up for a huge drop-off in April when contract signings had fallen 11.3 percent.

A reading of 100 is considered healthy by economists. The last time the index reached that level was in April 2010, the final month when buyers could qualify for a federal tax credit.

The number of people seeking unemployment benefits remains higher than would be expected in a healthy economy. Consumers are holding back on spending because of stagnant wages, high unemployment, tighter credit, and depressed home prices. That's restraining economic growth.

Unemployment applications had fallen in February to 375,000, a level that signals healthy job growth. But they then surged to an eight-month high of 478,000 in April and have declined only slowly since then.

Some of the drop likely reflects seasonal volatility. Applications were elevated earlier this month partly because of temporary layoffs in the auto and other manufacturing industries, which are ending. Many auto companies close their factories in early July to prepare for new models.

The total number of people receiving unemployment benefits, meanwhile, dipped to 3.7 million. That doesn't include millions of people receiving extended benefits under emergency programs enacted during the recession. All told, 7.65 million people received benefits in the week ended July 9, the latest data available.

Analysts forecast that the economy grew in the April-June quarter by an annual rate of only 1.7 percent, the second straight quarter of anemic expansion. The government reports on second-quarter growth Friday.

Hiring has slowed in recent months. The economy added only 18,000 net jobs in June. That's the fewest in nine months and below the average of 215,000 jobs per month that the economy added from February through April. The unemployment rate rose to 9.2 percent last month, the highest level of the year.

Manufacturing had been a bright spot in the economy since the recession ended two years ago. But it has stumbled in recent months. Orders for long-lasting manufactured goods fell 2.1 percent in June, the Commerce Department said Wednesday. It was the second drop in three months.

Economists had expected orders to increase, noting that temporary constraints have eased. In particular, gas prices have come down slightly since peaking in the spring. But manufacturing output has also been slowed by the Japan earthquake, which has disrupted global supply chains and created a parts shortage in the auto and electronics industries.

Federal Reserve Chairman Ben Bernanke and many private economists expect growth to pick up in the second half of this year, predicting those temporary factors will fade. Gas prices, for example, averaged $3.70 a gallon on Wednesday, down from their peak of nearly $4 in early May.

But some are growing more concerned that the economy's weakness will persist. The Fed said Wednesday that its survey of economic activity found growth slowed in eight of its 12 regions in June and early July. The report, known as the Beige Book, was the weakest this year.

Many economists are becoming more pessimistic about the second half of this year. Goldman Sachs recently cut its estimate for growth in the July-September period to 2.5 percent, down from 3.25 percent. JPMorgan, meanwhile, reduced its estimate to 2.5 percent from 3 percent.

Growth of about 2.5 percent is barely enough to reduce the unemployment rate. The economy would need to grow 5 percent for a whole year to bring down the rate by one percentage point.

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Associated Press Economics Writer Martin Crutsinger contributed to this report.

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Unemployment rose to 9.2 percent as hiring stalls (AP)

By CHRISTOPHER S. RUGABER, AP Economics Writer Christopher S. Rugaber, Ap Economics Writer – 41?mins?ago

WASHINGTON – Hiring slowed to a near-standstill last month, raising doubts that the economy will rebound in the second half of the year after a spring slump.

The economy generated only 18,000 net jobs in June, the fewest in nine months. The unemployment rate rose to 9.2 percent, the highest rate of the year, the Labor Department said Friday.

Stocks plunged after the report was released. The Dow Jones industrial average fell more than 120 points in midday trading. Broader indexes also declined.

"June's employment report doesn't have a single redeeming feature," said Paul Ashworth, an economist at Capital Economics. "It's awful from start to finish."

Two years after the recession officially ended, companies are adding fewer workers despite record cash stockpiles and healthy profit margins.

Businesses added just 57,000 jobs last month_ the fewest in more than a year. Governments cut 39,000 jobs. Over the past eight months, federal, state and local governments have cut a combined 238,000 positions.

It was the second straight month of feeble job growth. The number of jobs added in May was downwardly revised to 25,000.

Companies have pulled back on hiring after adding an average of 215,000 jobs per month from February through April. The economy typically needs to add 125,000 jobs per month just to keep up with population growth. And at least twice that many jobs are needed to bring down the unemployment rate.

"Our economy as a whole just isn't producing nearly enough jobs for everybody who is looking," said President Barack Obama, during a speech in the Rose Garden.

Obama used the dismal job data to press Congress to raise the government's borrowing limit. He also said Congress could help the economy by passing three free trade agreements, approving government projects that would create jobs for construction workers, and extending a payroll tax cut.

But Republicans have said they will not support an increase in the $14.3 trillion borrowing limit without an equal cut in spending. They also oppose raising taxes as part of any deal. If the limit isn't raised by Aug. 2, the nation will default on its debts, the Treasury Department says.

"These numbers serve as a warning that as we address the debt limit increase we shouldn't do so in a way that raises taxes and impedes the ability of small businesses to create jobs," said House Majority Leader Eric Cantor, a Republican from Virginia.

Economists have said that temporary factors, in part, have forced some employers to scale back hiring plans. High gas prices have cut into consumer spending, which fuels 70 percent of economic activity. And supply-chain disruptions stemming from the Japan crisis have slowed U.S. manufacturing production.

In June, hiring was weak in most sectors: Manufacturers added only 6,000 jobs; Education and health care, which added jobs through the recession, was flat; and professional and business services, which include accounting, legal and engineering jobs, grew by only 12,000.

Construction and financial services cut jobs.

The sluggish economy and anemic hiring is causing more people to simply give up looking for work. More than a quarter-million people stopped their job searches in June. That kept the unemployment rate from rising even further. When laid-off workers stop looking for work, they are no longer counted as unemployed.

Including discouraged workers and those working part time, but who would prefer full-time work, the "under-employment" rate jumped from 15.8 percent to 16.2 percent.

Unemployment has topped 8 percent for 29 months, the longest streak since the 1930s. It has never been so high so long after a recession ended. At the same point after the previous three recessions, unemployment averaged just 6.8 percent.

And those who do have jobs are earning less. Average hourly wages declined last month. After-tax incomes, adjusted for inflation, have been flat this year.

The average work week declined to 34.3 hours, from 34.4, which means employers demanded less work from their existing staffs. Usually companies demand more hours from their existing staffs when they are preparing to hire more workers.

Temporary employment fell 12,000. Businesses generally hire more temporary workers before taking on permanent ones.

The number of unemployed workers rose almost 175,000 to 14.1 million, pushing up the unemployment rate.

There are signs that economy could improve in the second half of the year. Gas prices have come down since peaking in early May at a national average of nearly $4 per gallon. Prices averaged $3.59 a gallon nationwide on Friday, according to AAA.

And manufacturing activity expanded in June at a faster pace than the previous month, according to the Institute for Supply Management. That suggests the parts shortage caused by the March 11 earthquake in Japan is beginning to abate.

More jobs are needed to boost incomes and consumer spending, which fuels 70 percent of the economy. Without more hiring, the economy may not be able to accelerate from its current weak pace of growth.

The government said last month that the economy grew only 1.9 percent in the January-March quarter. Analysts are expecting similarly weak growth in April-June quarter.

The economy is expected to grow at a 3.2 percent pace in final six months of the year, according to an Associated Press survey of 38 economists. But the latest report could prompt some economists to revise their forecasts.

Growth must be stronger to significantly lower the unemployment rate. The economy would need to grow 5 percent for a whole year to significantly bring down the unemployment rate. Economic growth of just 3 percent a year would hold the unemployment steady and keep up with population growth.

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