- By
- JEFFREY SPARSHOTT
- And
- JONATHAN HOUSE
- CONNECT
U.S. payrolls grew by 162,000 last month, the Labor Department said Friday. The unemployment rate, taken from a separate survey of U.S. households, fell two-tenths of a percentage point to 7.4%, its lowest level since December 2008.
Economists surveyed by Dow Jones Newswires had forecast that nonfarm payrolls would rise by 183,000 and the unemployment rate would tick down to 7.5%.
The latest snapshot of the job market suggests that slow economic growth may be weighing on employers. Higher taxes, federal spending cuts and slower growth abroad have held back the economy for months, though the pace of hiring has been solid so far this year.
In one negative sign, the Labor Department revised down the jobs totals for the two prior months by a combined 26,000.
[h=3]A Historical View[/h]U.S. unemployment since 1948
Over the past 12 months, the economy has added an average of 189,000 jobs a month, enough to slowly bring down the unemployment rate from its 8.2% level in July 2012.
"A steadily expanding economy is leading firms to hire," Gus Faucher, senior economist at PNC Financial Services, said ahead of Friday's release.
Still, the pace of economic growth over the past year has been anemic, prompting the Federal Reserve on Wednesday to leave in place its $85 billion-a-month bond-buying program. The economy expanded at only a 1.4% annualized pace in the first half of the year.
The central bank is watching developments in the jobs market closely as it considers its next steps for the bond purchases, which are meant to hold down interest rates and spur investment and hiring. If companies continue to hire and unemployment falls as the Fed expects, it may start to wind down the program later this year.
The latest employment report shows that labor markets continue to heal, albeit slowly.
The unemployment rate fell mostly because the number of employed people rose, though some also dropped out of the labor force. The unemployment figures are derived from a survey of households, while payroll numbers are based on a survey of employers. The two surveys can tell a slightly different story from month to month, but generally converge over time.
Private companies added 161,000 jobs in July, accounting for almost all of the month's gains. Employment increased in retail, food services, the securities industry and wholesale trade.
Manufacturers added 6,000 jobs, led by a healthy gain in the auto sector.
The federal government, meanwhile, continued to shed jobs. Federal payrolls declined by 2,000.
State governments also cut positions, though local governments continued to add to payrolls. Local government education jobs increased by 10,100.
Friday's report also said that average earnings fell by 2 cents to $23.98 an hour, while the average workweek decreased 0.1 hour to 34.4 hours.
Lower wages and fewer hours mean less money in consumers' pockets.
Write to Jeffrey Sparshott at [email protected] and Jonathan House at [email protected]
