Jobless rate in US falls to 7.4%

Associated Press

WASHINGTON

U.S. employers added 162,000 jobs in July, a modest increase and the fewest since March. At the same time, the unemployment rate fell from 7.6 percent to a 41/2-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 no longer were counted as unemployed.

Friday’s report from the Labor Department pointed to a less-than-robust job market. It suggested that the economy’s subpar growth and modest consumer spending are making many businesses cautious about hiring.

The government said employers added a combined 26,000 fewer jobs in May and June than it previously estimated. 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.

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 reaction from investors was muted. Stock averages closed with modest gains. The yield on the 10-year Treasury note fell to 2.6 percent from 2.71 percent — a sign that investors think the economy remains sluggish and might need continued help from the Federal Reserve.

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.”

Still, it’s possible that the lower unemployment rate, along with the hiring gains over the past year, could convince the Fed that the job market is strengthening consistently. Job growth has topped 140,000 a month for nearly a year.

“While July itself was a bit disappointing, the Fed will be looking at the cumulative improvement,” said Paul Ashworth, chief U.S. economist at Capital Economics. “On that score, the unemployment rate has fallen from 8.1 percent last August to 7.4 percent this July, which is a significant improvement.”