Unemployment 7% by qtr 1,2 in 2003
Message 17568133
Friday August 2, 10:35 am Eastern Time
Reuters Business Report
Job Growth Scanty in July
By Glenn Somerville
WASHINGTON (Reuters) - The U.S. economy generated a scant 6,000 new jobs in July, the Labor Department said on Friday in a report likely to fan fears growth is at risk of stalling after a weak spring quarter.
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July's job total came in far below Wall Street economists' expectations for a 69,000-job rise, while the unemployment rate was unchanged from the June level at 5.9 percent.
The June jobs gain was revised up to 66,000 from the 36,000 reported a month ago and left an overall impression of a lackluster job market.
The average workweek declined to 34 hours last month from 34.3 in June -- the lowest since a matching number last October following the shock of Sept. 11 attacks. Factory overtime fell to an average 4.1 hours in July from 4.3 a month earlier.
JOBLESS RECOVERY?
"There's very little growth in the private sector and I think that it's getting awfully hard to explain this away," said economist Mark Vitner of Wachovia Securities in Charlotte, N.C. "It looks an awful lot like a jobless recovery."
The closely watched report is likely to raise warning lights at the Federal Reserve, economists said. Policymakers there next meet to mull interest rates on August 13.
Two other reports from the Commerce Department left a muddled picture of economic prospects. New orders received by U.S. factories dropped steeply by 2.4 percent in June to $313.19 billion after a 0.6 percent increase in May. That was the steepest fall in orders since last November
But a separate report showed consumer spending climbed in June by 0.5 percent after being unchanged on May, while incomes posted a solid 0.6 percent pickup on top of a 0.4 percent May rise.
Spending has held up relatively well, keeping the economy growing so far this year, but most of the big stock-market price declines came in July, raising questions whether consumers may cut back as the year wears on.
Stock prices were soft -- but did not plunge -- in early Friday trading. The Dow Jones Industrial Average was off about 30 points in midmorning as the latest batch of soft economic news kept a damper on investors' hopes.
The slow growth in jobs makes policymakers' considerations more complicated as they try to plot a way to keep consumers and businesses confident enough to keep shopping and investing in new production operations.
"It's nail-biting time at the Fed right now." said John Hancock chief economist William Cheney.
The jobs figures imply companies are keeping a tight rein on staffing levels as they monitor whether economic growth will pick up after a bare 1.1 percent annual rate of expansion in national economic output during the second quarter.
Analysts noted the upward revision in June jobs was encouraging but said the data overall were likely to reinforce worry about the economy's recovery.
Revised data issued by the Commerce Department earlier this week showed GDP contracted for nine months at the beginning of 2001 and grew more slowly in the early part of this year than initially thought.
HARD ON INVESTORS
Jim Herrick, head of equity trading for Robert W. Baird & Co., said the latest news on top of weak manufacturing data for July was likely to weigh on stock prices.
"The buzzword now is double-dip recession, especially after weaker numbers yesterday," Herrick said.
The July employment report showed 86,000 people dropped out of the civilian workforce. A shrinking labor pool can help keep the unemployment rate from rising but may also imply that some people are simply too discouraged to keep looking for work.
Bond prices were modestly higher in the wake of the unemployment report, apparently on the belief it means the Fed is likely to keep interest rates on hold for some time to give the economy room to regain its footing. |
