US adds 1.62 lakh jobs in July; unemployment at 4-year low

Aug 03 2013, 01:10 IST
Comments 0
SummaryIncremental addition lowest in four months; market reaction negative

The number of jobs outside the farming sector increased by 1,62,000 last month, the smallest gain in four months and below analysts' expectations, US Labor Department data showed on Friday.

The lacklustre reading reinforced the view that the job market is only inching toward recovery from the 2007-09 recession and weighed on financial markets.

At the same time, gains in employment were enough to push the jobless rate down to 7.4 per cent, its lowest level since December 2008.

However, the report was full of details that cast the declining jobless rate in a poor light, and raised doubts over whether the economy has improved enough for the Fed to begin reducing bond purchases at its next meeting in September.

The darker side of the report gave direction to Wall Street. Yields on US government debt fell sharply, suggesting investors were less confident the Fed could soon begin easing its bond purchases, which are aimed at spurring employment. US stocks were mostly flat.

The US central bank currently buys $85 billion a month in bonds to keep borrowing costs low, and the stimulus program has helped the country's beleaguered housing market and boosted car sales.

Fed Chairman Ben Bernanke said last month the US central bank would likely reduce its monthly purchases by the end of the year if the economy progressed as much as policymakers expect.

The US GDP grew at a mere 1.4 per cent annual rate in the first half of the year, down from 2.5 per cent in the same period last year.

Most economists expect GDP to accelerate in the second half of this year, which would make it more plausible for the current hiring trend to continue.

Ads by Google

More from Business

Reader´s Comments
| Post a Comment
Please Wait while comments are loading...