Companies add 67K workers, but jobless rate rises

By CHRISTOPHER S. RUGABER, AP Economics Writer

WASHINGTON (AP) - Private employers hired more workers over the past three month than first thought, lifting hopes for the weak economy ahead of the Labor Day weekend. But the unemployment rate rose in August for the first time in four months as more people entered the market looking for work.

Companies added a net total of 67,000 new jobs last month and both July and June's private-sector job figures were upwardly revised, the Labor Department said Friday.

Stock futures surged after the report was released. Wall Street analysts expected a smaller gain, according to Thomson Reuters.

While the report hardly suggests the economy is out of danger, it's a reassuring sign after weeks of troubling data and comes after some encouraging economic figures in the past week.

Scott Brown, an economist at Raymond James, said he sees no sign of the country slipping back into recession.

"You're still seeing broad-based job gains. It's not strong, but it's positive," Brown said.

Overall, the economy lost 54,000 jobs as 114,000 temporary census positions came to an end. For the first time this year, the manufacturing sector lost jobs - down a net total of 27,000 for the month. The auto industry accounted for 22,000 of those lost jobs, the department said. But those losses were largely due to a shift in the timing of the industry's summer layoffs.

State and local governments shed 10,000 positions and have had net jobs losses in every month but one this year.

Temporary employment rose by nearly 17,000, after a slight loss in July. That indicates employers are looking to boost their work forces, but are reluctant to do so permanently. Temporary hiring averaged 45,000 per month from October to May, but has since slowed.

The jobless rate rose to 9.6 percent from 9.5 percent in July. More than a half-million Americans resumed their job searches in August, which drove up the jobless rate. When the unemployed stop looking for work, they are no longer counted in the jobless rate. It's the first time the labor force has grown since April.

Both June and July's figures were revised to show the private sector created more jobs in both months. The July figures were revised upward to 107,000 from 71,000. June was revised upward to 61,000 from 31,000. The revisions reflected smaller losses in construction, temporary help services and non-census government jobs.

Still, hiring has now been weak for four straight months. That deprives consumers of cash and reduces their ability to spend. Analysts expect economic growth to be tepid for the rest of this year and the jobless rate could keep rise to 10 percent or more in the coming months.

Average hourly earnings increased modestly and by more than economists expected, rising to $22.66 from $22.60.

The economy lost nearly 8.4 million jobs in 2008 and 2009. This year, private employers have added back 763,000 jobs. But the unemployment rate has barely moved, ticking down from 9.7 percent in January to 9.6 percent last month.

Including those who have given up looking for work and those who are working part time but would prefer full-time work, the so-called "underemployment" rate rose to 16.7 percent from 16.5 percent.

A jobless rate nearing 10 percent will ratchet up pressure on the Obama administration, Congress and the Federal Reserve to do more to jump start the economy. Tax cuts enacted in 2001 and 2003 are set to expire by the end of this year and many rank-and-file Democrats in Congress are joining Republicans in calling for all the cuts to be extended. President Barack Obama wants to let some tax cuts on upper income earners end.

Fed Chairman Ben Bernanke, meanwhile, said last week the central bank will take more steps to stimulate the economy if necessary. But he also said the foundations have been laid for economic growth to accelerate next year.

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