Saturday, August 7, 2010

Weak hiring hobbles economy

WASHINGTON — The nation isn't creating nearly enough jobs to reduce persistently high unemployment.
For the third straight month, the private sector hired cautiously, July figures show. And those meager gains in the job market were nearly wiped out by tens of thousands of cuts at all levels of government.

Many of the new jobs being created do not pay well enough to significantly jump-start spending by shoppers and stimulate the broader economy.

The unemployment rate was stuck at 9.5 percent for the second straight month, the Labor Department said Friday. Analysts said it probably would climb back into double digits because the private sector is not creating jobs fast enough.

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Private employers reported a net gain of 71,000 jobs for July, far below the 200,000 it takes for the unemployment rate just to hold steady and keep pace with the growing work force.

Counting the jobs lost at the local, state and federal levels in July, the net gain was only 12,000 jobs. And on top of that, 143,000 temporary jobs with the Census Bureau for the 10-year population count came to an end.

State and local governments wrestling with budget shortfalls have shed 169,000 jobs this year. Further losses are on the way despite $26 billion in federal aid. Up to 30,000 more job cuts a month are expected over the rest of the year.

The weak report could put pressure on the Federal Reserve to take new steps to boost the economy when it meets next week.

Economists are especially concerned that the recovery is losing momentum as it enters the second half of this year, when the benefits of most of the government's stimulus spending will start to wear off.

For now, most of them are betting the economy will continue to grow, though at a lackluster pace, through the rest of this year. Some analysts fear the recovery could fizzle altogether, though.

"If we don't see significant job growth by the end of the year, the economy could be in serious trouble," said Bill Cheney, chief economist at John Hancock.

President Barack Obama noted that the economy has added private-sector jobs for seven straight months but said the progress "needs to come faster."

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