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U.S. jobless rate drops to drops to 4 ½-year low

Many of the jobs employers added last month to lift the unemployment rate are lower-paying positions in stores, bars and restaurants. Experts say a mixed labor market is showing “continued improvement but at a still frustratingly slow pace.”

BRENDAN FITTERER | Times

Many of the jobs employers added last month to lift the unemployment rate are lower-paying positions in stores, bars and restaurants. Experts say a mixed labor market is showing “continued improvement but at a still frustratingly slow pace.”

WASHINGTON — U.S. employers added a modest 162,000 jobs in July as the unemployment rate fell from 7.6 percent to a 4 ½-year low of 7.4 percent.

The rate fell because more Americans said they were working, though some people stopped looking for a job and were no longer counted as unemployed.

Friday's report from the Labor Department pointed to a less-than-robust job market. Americans worked fewer hours in July, and their average pay dipped. And many of the jobs employers added last month were for lower-paying work at stores, bars and restaurants.

For the year, job growth has remained steady. The economy has added an average 200,000 jobs a month since January, though the pace has slowed in the past three months to 175,000.

Nariman Behravesh, chief economist at IHS Global Insight, called the employment report "slightly negative," in part because job growth for May and June was revised down by 26,000.

Scott Anderson, chief economist at Bank of the West, said it showed "a mixed labor market picture of continued improvement but at a still frustratingly slow pace."

The Fed will review the July employment data in deciding whether to slow its $85 billion a month in bond purchases in September, as many economists have predicted it will do. July's weaker hiring could make the Fed hold off on any pullback in its bond buying, which has helped keep long-term borrowing costs down.

Beth Ann Bovino, senior economist at Standard & Poor's, said she thinks Friday's report will make the Fed delay a slowdown in bond buying.

"September seems very unlikely now," she says. "I'm wondering if December is still in the cards."

More than half of July's job gain in the survey of big companies and government agencies came from lower-paying industries, extending a trend that is limiting Americans' incomes and possibly slowing consumer spending.

Retailers, for example, added nearly 47,000 jobs — the biggest gain for any industry last month. Restaurants and bars added 38,400.

Low-paying industries have accounted for 61 percent of jobs added this year, even though they represent only 39 percent of U.S. jobs overall, according to Labor Department numbers analyzed by Moody's Analytics. Mid-paying industries have accounted for less than 22 percent of the jobs added.

Many of the jobs added in July are only part-time, which the government defines as being fewer than 35 hours a week.

The number of Americans who said they were working part time but would prefer full-time work stands at 8.2 million, the highest since last fall.

Part-time jobs accounted for 65 percent of the jobs added in July and 77 percent of those added this year.

A summary of other key economic reports released Friday:

More spending

Consumers increased their spending in June at the fastest pace in four months even though their income growth slowed. Consumer spending rose 0.5 percent in June compared with May, when spending was up 0.2 percent, the Commerce Department said. It was the best gain since a 0.7 percent rise in February. Income growth slowed to a 0.3 percent rise in June, weaker than May's 0.4 percent gain.

More factory orders

Orders placed with U.S. factories rose to a record high in June, boosted by strong demand for airplanes, machinery and autos. Factory orders rose 1.5 percent in June compared with May, when orders had risen 3 percent, the Commerce Department reported. The gains pushed total orders to a record $496.7 billion.

U.S. jobless rate drops to drops to 4 ½-year low 08/02/13 [Last modified: Friday, August 2, 2013 7:56pm]
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