(MENAFN- Arab Times) US employers added 163,000 jobs in July, a hopeful sign after three months of sluggish hiring.
The Labor Department said Friday that the unemployment rate rose to 8.3 percent, from 8.2 percent in June.
Stronger job creation could help President Barack Obama's re-election hopes. Still, the unemployment rate has been above 8 percent since his first month in office - the longest stretch on record. No president since World War II has faced re-election with unemployment over 8 percent.
July's hiring was the best since February.
Still, the economy has added an average of 151,000 jobs a month this year, roughly the same as last year's pace. That's not enough to satisfy the 12.8 million Americans who are unemployed.
The government uses two surveys to measure employment. A survey of businesses showed job gains. The unemployment rate comes from a survey of households, which showed fewer people had jobs. Economists say the business survey is more reliable.
Investors appeared pleased with the report. Futures tracking the Standard & Poor's 500 index and the Dow Jones industrial average gained about 1 percent. The stock market is coming off four days of losses. Yields on government bonds also rose after the report came out as investors moved money out of low-risk assets.
A better outlook on hiring could also prompt the Federal Reserve to hold off taking more action to spur growth. The US central bank, which ended a two-day policy meeting Wednesday, signaled in a statement a growing inclination to take further steps if hiring doesn't pick up.
The job gains were broad-based. Manufacturing added 25,000 jobs, the most since March. Restaurants and bars added 29,000. Retailers hired 7,000 more workers. Education and health services gained 38,000. Governments cut 9,000 positions.
Average hourly wages also increased by 2 cents. Over the past year, wages have increased 1.7 percent - matching the rate of inflation.
Despite July's job gains, the economy remains weak more than three years after economists declared the recession had ended in June 2009. Growth slowed to an annual rate of 1.5 percent in the April-June quarter, down from 2 percent in the first quarter and 4.1 percent in the final three months of 2011.
Manufacturing activity shrank for the second straight month in July, a private survey said Wednesday. Consumer confidence improved slightly last month but remains weak.
Rising pessimism about the future is taking a toll on businesses and consumers, many economists say. Europe's financial crisis has weakened that region's economy, hurting US exports. Worries have also intensified that the US economy will fall off a "fiscal cliff" at the end of the year. That's when tax increases and deep spending cuts will take effect unless Congress reaches a budget deal. A recession could follow, Fed Chairman Ben Bernanke has warned.
Spending
Americans are responding by spending less and saving more. A big reason growth slowed in the second quarter was that consumer spending, which accounts for roughly 70 percent of economic activity, slowed to an annual growth rate of 1.5 percent. That was down from 2.4 percent in the first quarter.
Economists said the July reading was encouraging because it at least showed a small rebound from June's decline in activity.
Paul Dales, senior US economist at Capital Economics, said an index reading at this level was consistent with growth in the overall economy at a sluggish pace of 1 percent to 1.5 percent in the current July-September quarter.
"Although it is encouraging to see the survey strengthen, it still appears as though the economy started the third quarter on a fairly weak note," Dales said.
Overall economic growth, as measured by the gross domestic product, slowed to an annual rate of 1.5 percent in the April-June quarter, down from an already lackluster pace of 2 percent in the January-March period.
US employers have scaled back on hiring and for those who are working, paychecks are barely keeping pace with inflation, making consumers less confident in the economy.
Consumer spending, which drives 70 percent of economic activity, has been weak in recent months. Consumers spent no more in June than they did in May, a month when spending actually fell. However, there was a glimmer of hope that things might be looking up for retailers.
Many major retailers reported better-than-expected results in July, saying that sales had been helped by hot weather and summer clearance sales. A tally by the International Council of Shopping Centers of 20 major retailers found revenue in stores open at least a year rose 4.6 percent in July, compared to activity in July 2011.
A separate ISM report this week showed that manufacturing shrank for the second straight month in July. The ISM said its manufacturing index stood at 49.8, little changed from a June reading of 49.7, which had been the first time the survey showed manufacturing contracted in three years.
In recent months, factory activity has weakened along with the broader economy. Manufacturers have been hurt not only by a slowdown in consumer spending in the United States but by Europe's economic problems and slower growth in China and other emerging markets which has dampened demand for US exports.
The Federal Reserve at a meeting this week decided to hold off providing further support to the economy but signaled that more help could be on the way if economic growth does not revive. Many private economists believe the central bank will decide to launch another round of bond buying at the Fed's next meeting in September.
With fewer than 100 days to go until the US presidential election, the figures will also help set the tone for the race for the White House.
Republican Mitt Romney will zero in on the rising unemployment rate, which is the highest since February and is, for the 42nd straight month, above eight percent.
But the number of jobs created will make it difficult for Romney to steer the debate away from issues that have seen him drop in the polls.
The last month has seen Romney criticized for not releasing more of his tax returns, diplomatic missteps in Britain, Israel and Poland, his dealings at Bain Capital and his tax plan.
That has resulted in Obama opening up a two-point lead in national tracking polls as he pulls away in key swing states like Florida, Ohio and Pennsylvania, leaving Romney with plenty to do if the election is not to slip through his hands.
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