Joblessness Rises Amid Uncertainty

Many other employers across the country are having trouble filling job openings in information technology, finance and other high-skill professions, said Roy G. Krause, chief executive of Spherion Corp., a staffing company with 650 offices nationwide. "We have significantly more orders in every one of our offices than we have qualified candidates to fill," he said.

Krause said he's advising some clients to offer higher wages "to draw more people and better candidates into the workforce."

In part because of growing demand for skilled, highly paid professionals, workers' average hourly earnings rose by 7 cents, to $16.76, in July, 0.4 percent higher than in June and 3.8 percent more than a year earlier.

The wage gains and an unemployment rate that is still low by historical standards show the job market remains quite strong, analysts said.

But it's also getting a little tougher for some job seekers. By July, workers were spending an average 17.3 weeks looking for a job, up from 16.2 in June. The share of workers unemployed for longer than six months grew to 18.6 percent last month from 16.2 percent.

The unemployment rate for black workers rose to 9.5 percent in July from 9 percent in June. The rate for whites was unchanged at 4.1 percent last month, and the Latino rate stayed at 5.3 percent.

Earlier this week, the Labor Department released data showing the unemployment rate in the Washington area fell in June to 3.3 percent from 3.7 percent in June 2005, showing continued strength in the local economy.

Many analysts concluded yesterday that the soft national employment report would cement the case for the Fed to rest Tuesday and leave its short-term benchmark interest rate unchanged at 5.25 percent. After the jobs report was released, traders in futures markets calculated the chances of a pause to be above 80 percent, from about 60 percent the day before.

"The Fed is done," said Ian Shepherdson, chief U.S. economist for High Frequency Economics Ltd., who forecasts markedly slower growth in coming months.

But others argued that the Fed would lift the rate at least once more on Tuesday, to 5.5 percent, for an 18th consecutive increase, to combat rising inflation.

"We still think the Fed will put inflation concerns first and pull the rate trigger," wrote Paul Ashworth, senior economist at Capital Economics Ltd.

And even if the Fed pauses on Tuesday, it may raise interest rates later this year, said several analysts, including Wachovia's Silvia. The recent wage gains in particular "will keep the Fed and investors on inflation watch," he said.

Staff Writer Cecilia Kang contributed to this report.