The US economy generated a higher-than-expected 117,000 jobs in July, slightly reducing the unemployment rate in a rare recent bit of good news for the struggling economy, the Labour Department said on Friday.
The department also sharply revised upward the data for the previous two months, which had originally raised concerns that the economy had flatlined.
But the figures still put barely a dent in the overall US jobless numbers, with nearly 14 million still listed as officially unemployed, and millions more who have dropped out of the jobs market entirely.
The private sector generated 154,000 jobs in July, easily offsetting a loss of 37,000 positions in the public sector — most of which came from sweeping layoffs in the state of Minnesota as the government shut down due to a political fight over spending and union benefits.
On average, economists had forecast only a net 84,000 jobs generated.
There were job gains in health care, retail trade, manufacturing and mining, according to the department.
It said the public sector cuts were “almost entirely due to the partial government shutdown in Minnesota”.
The White House, under assault from opposition Republicans for the weak economy, welcomed the data but warned the unemployment rate was still too high at 9.1 per cent, down from 9.2 per cent in June.
“While the better-than-expected report is welcome news, the unemployment rate remains unacceptably high and faster growth is needed to replace the jobs lost in the downturn,” said Austan Goolsbee, chairman of the Council of Economic Advisers.
Republicans said the still-high jobless rate demonstrated the failure of President Barack Obama’s economic policies.
“Today’s unemployment report is more proof that all of the Washington spending, taxing and regulating is devastating our economy,” said Republican House Speaker John Boehner, the number-three US elected official.
The Labour Department revised the figures for June to 46,000 net jobs (from the original 25,000 estimate) and for May, 53,000 (from 18,000).
Though much brighter than before, the three-month average remains well below the estimated 100,000 or more needed just to accommodate new entrants to the workforce to meet the growing population — much less to cut the overall number of jobless Americans.
After plunging over fears of a new global economic downturn on Thursday, US markets jumped sharply higher upon opening Friday morning after the jobs data came out.
But an hour after opening, the Dow Jones Industrial Average — which lost 4.3 per cent on Thursday — had fallen back to around the break-even point.
The data showed that 13.9 million Americans were still unemployed in July, better than June but still higher than March’s 13.5 million.
Goolsbee said the economy had hit a slow patch in the first half of 2011, driven in part by Japan’s March earthquake disaster, the surge in oil prices, and instability in Europe.
“We took some heavy blows for the first half of this year,” he said on Bloomberg television.
“But now all the focus has got to be, how do we get the growth rate back up in the second half of the year?”
Figures released in recent weeks mostly point to the US economy having stagnated over the past two months, and suggest businesses have been hesitant to hire while the government was locked in a political battle over long-term economic policy and the debt ceiling.
Meanwhile, under pressure to trim their budget deficits, government authorities at all levels — federal, state and local — have been cutting staff.
Goolsbee dismissed worries of a second recession, two years after the last one ended.
“If we are growing, if we are adding 2.4 million jobs over 17 months, those are not the things that a double-dip recession looks like.”
