US jobless rate falls to four-year low
Washington, August 3, 2013
US employers slowed their pace of hiring in July but the jobless rate fell anyway, a pair of mixed signals that could make the U.S. Federal Reserve more cautious about drawing down its huge economic stimulus program.
The number of jobs outside the farming sector increased by 162,000 last month, the smallest gain in four months and below analysts' expectations, Labor Department data showed on Friday.
The lackluster reading reinforced the view that the job market is only inching toward recovery from the 2007-09 recession and weighed on financial markets.
"We're sort of grinding along here," said Gordon Charlop, managing director at Rosenblatt Securities in New York.
At the same time, gains in employment were enough to push the jobless rate down to 7.4 percent, its lowest level since December 2008.
However, the report was full of details that cast the declining jobless rate in a poor light and raised doubts over whether the economy has improved enough for the Fed to begin reducing bond purchases at its next meeting in September.
Several Wall Street banks, in fact, pushed their forecasts for the Fed's so-called tapering move toward year end from September.
Part of the drop in unemployment was due to a decline in the size of the U.S. workforce, which only includes people who have jobs or are looking for work. The workforce can shrink when more workers retire or go to school, but it also contracts when people give up the job hunt.
Also robbing some of the report's luster, Americans on average worked shorter work weeks in July, while hourly wages fell. That bodes poorly for future consumer spending, the engine of the U.S. economy. The construction industry shed 6,000 jobs.
The government also said 26,000 fewer jobs were created in May and June than previously estimated.
In July, 4.25 million Americans had been unemployed for at least six months. – Reuters