Payrolls in U.S. rose less than forecast; jobless rate at 7.3%

THE NATIONAL UNEMPLOYMENT rate dropped to 7.3 percent in August, the lowest since December 2008, according to the U.S. Bureau of Labor Statistics. / SOURCE: U.S. BUREAU OF LABOR STATISTICS
THE NATIONAL UNEMPLOYMENT rate dropped to 7.3 percent in August, the lowest since December 2008, according to the U.S. Bureau of Labor Statistics. / SOURCE: U.S. BUREAU OF LABOR STATISTICS

WASHINGTON – Payrolls in the U.S. climbed less than projected in August after smaller gains the prior two months, indicating companies are being deliberate in their hiring as they wait for a pickup in demand. The unemployment rate unexpectedly fell as more people left the labor force.

The gain of 169,000 workers last month followed a revised 104,000 rise in July that was smaller than initially estimated, Labor Department figures showed today in Washington. The median forecast of 96 economists surveyed by Bloomberg called for an August increase of 180,000. Unemployment dropped to 7.3 percent, the lowest since December 2008.

The weaker data come as Federal Reserve officials, who meet Sept. 17-18, are debating whether the expansion and job market have improved enough to warrant trimming monthly bond purchases. While some companies are awaiting a pickup in sales before adding to staff, Ford Motor Co. is among those putting more workers on assembly lines as the auto industry surges.

“Job growth will remain less than desirable until we see the pace of economic activity pick up,” Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, said before the report. “In this environment, businesses have to tread their way gingerly.”

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The unemployment rate, derived from a Labor Department survey of households rather than employers, was forecast to hold at 7.4 percent, according to the Bloomberg survey median.

The participation rate, which indicates the share of working-age people in the labor force, declined to 63.2 percent, the lowest since August 1978, from 63.4 percent.

Bloomberg survey estimates for payrolls ranged from increases of 79,000 to 220,000 after a previously reported 162,000 gain in July. Revisions to prior reports subtracted a total of 74,000 jobs to overall payrolls in the previous two months.

Private employment

Private employment, which exclude government agencies, rose 152,000 after a revised gain of 127,000 in July that was weaker than first reported. Private payrolls were projected to rise by 180,000, the survey showed.

Employment at factories increased by 14,000 following a 16,000 decrease in the previous month. Economists had projected a 5,000 rise.

Employment at private service-providers increased less in August than the prior month. Government payrolls rose by 17,000.

Average hourly earnings climbed by 0.2 percent to $24.05 in August from the prior month, and increased 2.2 percent over the past 12 months.

Longer hours

The average work week for all workers rose to 34.5 hours from 34.4 hours.

While an improving economy is creating job opportunities, the road to employment hasn’t been easy.

Madison Li, 22, will start a job as an information technology consultant in Atlanta later this month after graduating from Emory University with a double major in economics and Chinese language and literature. Li put out 25 applications over the past year, and did about 15 interviews before getting four job offers.

“I think it is still not easy” for new graduates, Li said. “We still have a lot of very qualified graduates who are unable to find jobs because of the economy. It is a little bit better than a year ago or the year before. I think it is getting better.”

Federal reserve

This is the last payrolls report Fed officials will see before this month’s meeting. Policy makers will probably decide to scale back the pace of bond purchases when they next meet, according to 65 percent of economists surveyed by Bloomberg Aug. 9-13.

Fed policy makers were “broadly comfortable” with Chairman Ben S. Bernanke’s plan to start reducing the purchases if the economy improves, minutes of their July meeting showed.

Central bankers had affirmed a pledge on July 31 to continue bond buying until they see signs “the outlook for the labor market has improved substantially.” The Fed has also committed to hold the main interest rate near zero as long as the jobless rate is above 6.5 percent and the outlook for inflation doesn’t exceed 2.5 percent.

Job gains and rising home values have shored up Americans’ finances, propelling big-ticket purchases such as automobiles and indicating further potential for employment. Cars and light trucks sold in August at the fastest annualized rate since 2007, according to Ward’s Automotive Group. Sales at General Motors Co., Ford, Toyota Motor Corp. and Honda Motor Co. all exceeded analysts’ estimates.

Ford production

Dearborn, Mich.-based Ford, the second-largest U.S. automaker, this week reported it will boost fourth-quarter production by 7 percent. The company had in August said an additional shift of 1,400 new workers at a factory in Flat Rock, Mich., will help increase its Fusion sedan capacity.

Other businesses adding workers include AT&T, the largest U.S. phone company, which is looking to fill “hundreds” of positions in the San Francisco Bay area, the company said in an Aug. 29 statement.

The Institute for Supply Management’s factory index showed manufacturing expanded in August at the fastest pace since June 2011. The group’s gauge of service industries, which cover almost 90 percent of the economy, posted the highest reading since December 2005, according to data compiled by Bloomberg.

Some companies contending with limited growth in overseas markets are trimming their workforce. San Jose, Calif.-based Cisco Systems Inc., the biggest maker of networking equipment, on Aug. 14 said it is cutting 4,000 jobs, or 5 percent of its workforce, as weaker sales in Japan, China and Europe weigh on revenue growth.

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  1. For a more detailed explanation of this situation; Go to http://www.bls.gov/news.release/empsit.t15.htm Note that the National ” U6 ” level of unemployment for AUGUST 2013 is THIRTEEN POINT SEVEN PER CENT…(13.7%)…(R.I. is HIGHER>>>)