U.S. job growth revived and the unemployment rate fell last month, the government reported yesterday, providing fresh ammunition for both presidential candidates as they debate the strength of the economy in the last months before the election.
Employers added 144,000 jobs to their non-farm payrolls in August on a seasonally adjusted basis, an improvement after two months in which job growth essentially stalled, but barely enough to keep pace with population growth.
The nation's jobless rate also 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 occurred largely because many people stopped working or gave up looking for work, resulting in a smaller labor force.
The pickup in hiring indicates the economy is regaining some momentum after a sluggish summer, analysts said.
Yet signs of economic weakness persist. Just this week, many retailers reported sluggish back-to-school spending. The nation's top two automakers said they will cut production in the last three months of the year because of bloated inventories. Intel Corp., the world's largest computer chip maker, lowered its sales forecast for coming months.
The August job gain is not "an especially strong number, but it does at least provide hope that the 'soft patch' may be fading," Ian Morris, chief economist at HSBC Securities (USA) Inc., said in a note to clients.
Though the nation has gained 1.7 million jobs in the past year, it still has 900,000 fewer than when President Bush took office in January 2001. Economists agree it is unlikely that 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," Democratic presidential nominee Sen. John F. Kerry (Mass.) said in a prepared statement. "I will set a new course with an economic plan that will create jobs and put middle-class families first."
But Bush administration officials cast the report as a sign that the president's policies have enabled the economy to survive 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 is growing and it is getting stronger," Bush said at a campaign rally in Wisconsin. "My opponent is running to expand government. We're running to expand opportunity."
Stocks rose initially after the report was released, but the major indicators ended the day down.
U.S. economic growth slowed sharply this year, to a 2.8 percent annual rate in the April-through-June quarter from a more robust 4.5 percent in the first quarter. The downshifting reflected the effects of higher oil prices, falling exports and weak income growth in the spring, following a period in which growth had been boosted by federal tax cuts and very low interest rates.
The job gains in June and July were so small that Labor Department economists view the total number of payroll jobs in those months as essentially unchanged. That was true even after revisions yesterday that added a combined 59,000 jobs to the June and July tallies.
Fed Chairman Alan Greenspan in July said that the economy was passing through a "soft patch" but that the economic recovery appeared to be on track.
The economy has probably picked up some speed since then, growing at around a 3.5 percent annual rate, many analysts estimate.
"It is clear the economy is picking up from the soft patch of earlier this year, but it's not picking up euphorically," said Richard Yamarone, director of economic research at Argus Research Co.
The jobs report was good enough, analysts generally agreed, that the Fed is likely to lift its benchmark overnight interest rate to 1.75 percent from 1.50 percent when policymakers meet later this month. Greenspan testifies on Capitol Hill on Wednesday and is likely to signal whether there is any reason to expect otherwise.
Fed officials believe the rate is too low for a growing economy and must be lifted to prevent easy credit from fueling inflationary pressures in the future.
The nation needs to add about 150,000 jobs a month to keep pace with population growth, according to economists. While employers have added jobs for 12 consecutive months, the gains have exceeded that level in only four of those months.
Many employers remain reluctant to add to their payrolls because of competitive pressures to hold down costs and continuing uncertainty about the strength of the economic recovery, analysts say.
Job seekers agree. "People don't see big jumps in hiring because companies are being cautious," said Mike DeBruhl, 58, of Reston, who lost his job as a human resources manager at Capital One Financial Corp. in April. "It is quite frustrating to . . . [job] candidates these days because companies don't have the same sense of urgency as a candidate does."
Management Recruiters International Inc., a recruiting firm, placed more candidates in jobs last month than in the previous month, said Eric Goodstadt, chief of marketing. But, he said, "the demand for jobs still far outnumbers the job opportunities."
The jobless rate fell last month as the labor force shrank. The share of the adult, civilian population in the labor force fell to 66 percent, from 66.2 percent the month before.
The jobless rate for white workers slipped to 4.7 percent last month from 4.8 percent the month before. Unemployment among blacks fell to 10.4 percent from 10.9 percent. Unemployment among Hispanic or Latino workers edged up to 6.9 percent from 6.8 percent.
"There is still plenty of excess labor supply," said Morris, of HSBC.
The job gains were spread widely among many industries, including manufacturing, construction, professional services, education, government and health care. The number of jobs dropped in retailing and telecommunications.
Paychecks improved last month. Average hourly earnings rose by 5 cents to $15.77, seasonally adjusted. Average weekly earnings rose $1.69 to $533.03.
But wage growth has not kept up with inflation over the last year, said Jared Bernstein, senior economist with the Economic Policy Institute, a think tank that focuses on labor issues. "Thus working families have to add hours to raise incomes right now, and unless employment growth picks up, this will remain a challenge for many," he wrote in an analysis of the Labor report.