Aug. 3 - The U.S. economy surprisingly added 163,000 jobs in July, the strongest payroll gain in five months, but a rise in the unemployment rate to 8.3 percent is only one reason to remain concerned about the labor market. Conway G. Gittens reports.
PLEASE NOTE: THIS EDIT CONTAINS CONVERTED 4:3 MATERIAL The labor market is finally showing signs of improvement. Job creation jumped to a five-month high in July, up 163,000 compared to expectations of a net gain of 100,000, according to the Labor Department. But the unemployment rate also ticked up to 8.3 percent from 8.2 percent. A pick-up in job growth is good news for the struggling economy, but John Lonski of Moody's Capital Market Research Group is not convinced weak job growth is a thing of the past. SOUNDBITE: JOHN LONSKI, CHIEF ECONOMIST, MOODY'S CAPITAL MARKETS RESEARCH GROUP (ENGLISH) SAYING: "We still have to be aware of the current weak performance by business sales and by profits that warns against becoming unduly optimistic regarding job prospects going forward. In other words, this better-than-expected report on payrolls could prove to be fleeting." But investors were optimistic, happy that July's payroll gains broke three months of increases below 100,000, quickly sending the stock market swiftly higher. Lonski, however, points to the types of jobs being created as a reason to remain concerned. 9.41.32 SOUNDBITE: JOHN LONSKI, CHIEF ECONOMIST, MOODY'S CAPITAL MARKETS RESEARCH GROUP (ENGLISH) SAYING: "For the current recovery to date as of June 2009, 90 percent of the jobs created in the U.S. economy have come from retailing, private sector health care, and temporary employment. Ordinarily those types of jobs pay below average wages and that helps explain why wage growth and income growth has been so weak relatively to the historical trend." Other economists point out: a small bump up in wages and unchanged hours worked hours in July suggest the labor market will not grow fast enough in coming months to sufficiently bring down the unemployment rate, and that will keep the Federal Reserve ready to add more stimulus, despite last month's stronger-than-expected pick-up in hiring. Conway Gittens, Reuters