Friday, August 5, 2011

National Umployment Rate drops to 9.1%

So what does this mean to you?

WASHINGTON (AP) — Hiring picked up slightly in July and theunemployment 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 Departmentsaid 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 taxcut 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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