Economy Added 144,000 Jobs in August

Unemployment Rate Dips to 5.4%

U.S. job growth revived last month, the government reported today, providing fresh ammunition for both presidential candidates as they debate the strength of the economy in the final two months before the election.

Employers added 144,000 jobs to their nonfarm payrolls in August, seasonally adjusted, barely enough to keep up with population growth, but still a marked improvement following two months in which job growth essentially stalled.

The nation's unemployment rate fell, for a second month in a row, to 5.4 percent, the lowest level in nearly three years, the Labor Department reported. But the decline largely reflected a drop in the size of the labor force, meaning that many people stopped working or gave up looking for work.

The report showed the economy gained 1.7 million jobs in the past year, but still has 1 million fewer than the recent peak in March 2001, when the recession began, shortly after President Bush took office. Economists agree it is very unlikely that the deficit will be erased before Election Day.

"President Bush is now certain to be the first president since the Great Depression to face reelection without creating a single job," the Democratic presidential nominee, Sen. John F. Kerry, said in a statement. "I will set a new course with an economic plan that will create jobs and put middle-class families first."

But Bush administration and campaign officials cast the report as another sign that the economy is continuing to grow stronger after enduring three years of shocks, including the 2001 recession, the terrorist attacks that year, the global uncertainties surrounding the war in Iraq and the recent run up in oil prices.

"Our economy was in steep decline when the president took office," Treasury Secretary John Snow said in remarks prepared for a meeting with builders in Philadelphia. "Today things are better. ... While it's clear things are improving nicely, and the economy is on a solid footing, we are not at all satisfied and there is still more work to be done."

Stocks rose initially after the report was released, but they were trading lower at midday.

The pickup in hiring last month encouraged some analysts to suggest that the economy might be gaining some momentum after passing through a summer "soft patch," as termed by Federal Reserve Chairman Alan Greenspan in July.

The report was good enough, analysts generally agreed, that the Fed is likely to lift its benchmark overnight interest rate to 1.75 percent from 1.5 percent when policymakers meet later this month. Greenspan testifies on Capitol Hill Wednesday and, keeping with his practice of trying to prepare financial markets for Fed actions, is likely to signal whether there is any reason to expect otherwise.