LABOR DEPARTMENT REPORT Sluggish job market continues to frustrate Americans

Consumer spending rose slightly, while payrolls dropped.
WASHINGTON (AP) -- The nation's unemployment rate declined to 6.2 percent in July, and nearly half a million discouraged Americans stopped looking for a job. Payrolls were cut for the sixth month in a row, suggesting businesses remain cautious and want to keep work forces lean despite budding signs of an economic revival.
The Labor Department's report Friday painted a picture of a job market that remains stubbornly sluggish and continues to frustrate people looking for work.
The economy lost 44,000 jobs in July. While that's an improvement from the 72,000 shed in June, economists were hoping that positions would actually be added. They were forecasting payrolls to go up by about 10,000.
"The job market is going to be the last thing in the economy that improves," said Mark Zandi, chief economist at Economy.com. "Businesses have to feel the recovery is going to stick around for a while before they expand hiring."
The jobless rate dipped to a two-month low of 6.2 percent from a nine-year high of 6.4 percent in June. The civilian workforce dropped by 556,000 during the month, contributing to the decline in the unemployment rate. Some 470,000 discouraged people abandoned job searches because they believed no jobs were available.
Consumer spending
The lackluster job market, however, hasn't stopped consumers -- the main force keeping the economy afloat -- from ringing up retailers' cash registers. Consumer spending and Americans' incomes each rose by a modest 0.3 percent in June, the Commerce Department reported.
Another report also offered some encouraging news: Manufacturing expanded in July for the first time in five months, a fresh sign that the economy is healing. The Institute for Supply Management said its manufacturing index stood at 51.8 in July, up from 49.8 in June. A reading below 50 indicates that manufacturing activity is slowing, and a reading above 50 indicates it is growing.
Spending on construction projects, meanwhile, was flat in June at a seasonally adjusted annual rate of $864.3 billion.
In July, there were 2 million out-of-work people looking for a job for 27 weeks or longer, about the same level as in June, the government said.
Manufacturers, hardest hit by the 2001 recession, continued to hemorrhage jobs. The sector lost 71,000 positions in July, marking the 36 month in a row of job losses.
Retailers cut 14,000 jobs in July, and education and health services lost 1,000.
In a glimmer of hope, though, temporary help firms saw employment go up by nearly 42,000 in July from the previous month. Economists said companies are often more inclined to use temporary workers to meet their needs before making a commitment to hire full-time workers.