Jobless rate falls, easing fears of slump
By Jeannine Aversa
By Jeannine Aversa
WASHINGTON — A hiring revival pulled the nation's unemployment rate down to 4.7 percent in August and flashed a Labor Day weekend message that the slowing economy isn't in danger of fizzling out.
The latest snapshot, released by the Labor Department yesterday, was a bit brighter than expected and eased some fears that the economy — weighed down by a housing slump — might tip into recession.
"This provides some peace of mind," said Oscar Gonzalez, economist at John Hancock Financial Services.
Employers boosted payrolls by 128,000 in August, an improvement over the 121,000 jobs created in July. Schools, hospitals, financial firms, computer-design shops and construction companies were among those posting employment gains last month. That helped to blunt job cuts in manufacturing, retailing, trucking and elsewhere.
With hiring improving, the unemployment rate dropped down a notch from a five-month high of 4.8 percent in July. That decline put the current unemployment rate close to a five-year low of 4.6 percent reached in May and maintained in June.
The jobless rates for blacks in August dipped to 8.8 percent, the lowest since July 2001. The unemployment rate for Hispanics held steady at 5.3 percent.
Although economists pointed to the employment figures as evidence that the economic expansion, which began in late 2001, remains intact, there is an obvious weak spot.
Construction spending plunged in July by the largest margin in nearly five years, the Commerce Department reported, another sign of the cool-down in the once-sizzling housing market.
A report from the Institute for Supply Management, meanwhile, showed manufacturing activity in August expanding at a slower — but still decent — clip than in July. That's consistent with the moderate growth seen in the overall economy.
The latest batch of economic news comes as the nation's work force gets ready to celebrate the Labor Day holiday and as the election season looms.
Economic conditions are likely to be on voters' minds when they go to the polls in November.
"The economy is a top concern for many voters in America, although there are other salient issues like the war in Iraq and terrorism," said Costas Panagopoulos, a political science professor at Fordham University.
Workers' average hourly earnings edged up to $16.79 in August, a tiny 0.1 percent increase from July.
Over the 12 months ending in August, though, wages grew by 3.9 percent. The last time this figure was higher was in June 2001. Yet, many workers' paychecks are barely keeping up with inflation, economists said.
The job hunt grew longer.
The average time that the 7.1 million unemployed spent searching for work in August was 17.4 weeks. That was the longest duration since February's 17.6 weeks.