Payrolls grow by 128,000 in August, pulling jobless rate down to 4.7 percent

Friday, September 1st 2006, 8:52 am
By: News On 6

WASHINGTON (AP) _ Hiring perked up in August as employers added 128,000 jobs, pulling down the unemployment rate to 4.7 percent and flashing a Labor Day weekend message of an economic expansion that still has staying power.

The latest snapshot, released by the Labor Department Friday, was a bit brighter than expected and should ease any fears that the expansion that began in late 2001 is in danger of fizzling out.

The tally of new jobs last month was slightly stronger than the 125,000 that economists were forecasting. The nation's unemployment rate dropped down a notch from a five-month high of 4.8 percent in July. Job gains for June and July also turned out to be better than previously estimated. In June, employers boosted payrolls by 134,000 positions and in July they added another 121,000.

``Today's report was solid and indicates that the economy is not falling away very quickly but it certainly wasn't so spectacular that it renewed oversized fears of inflation,'' said Carl Tannenbaum, chief economist at LaSalle Bank. ``The report is right on the mark. Goldilocks may be coming. The economy is not too hot nor too cold,'' he said.

The report comes as the nation's work force gets ready to celebrate the Labor Day holiday and as the election season looms.

Economic conditions _ especially those where people live and work _ are likely to be on voters' minds when they go to the polls in November.

Workers' average hourly earnings edged up to $16.79 in August, a 0.1 percent increase from July. Economists were forecasting a bigger, 0.3 percent advance. While workers welcome strong wage growth, economists worry that a rapid and prolonged pickup in wages can ignite inflation fears.

Over the 12 months ending August, wages grew by a strong 3.9 percent. The last time this figure was higher was in June 2001.

The Federal Reserve on Aug. 8 decided to halt a more than two-year long rate raising campaign given the slowing economy and the cooldown in the housing market. The Fed's rate increases were aimed at keeping inflation in check. Fed policymakers expressed hoped that the slowing economy eventually would help lessen inflationary pressures.

Economists have mixed opinions about the Fed's next move on Sept. 20. Some believe the central bank will leave rates alone again, while others predict another rate increase will be ordered to fend off inflation.

Across industries, the jobs picture was mixed. Schools, health care providers, construction companies, financial services and others boosted payrolls in August. However, factories shed 11,000 workers _ the second straight month of job cuts and retailers slashed just 13,500 positions. Transportation and warehousing firms cut 7,100 slots.

The fresh snapshot of the job climate comes as employers have coped with a slowing economy, sagging consumer confidence and elevated energy prices.

Oil prices, which surged to a record closing high of $77.03 in mid-July, have retreated some since then and are now hovering just above $70 a barrel.

Other recent economic reports suggest the economy's slowdown isn't as steep as some feared.

Retailers reported good sales in August as shoppers hit the malls buying skinny jeans and back-to-school gear. Consumer spending shot up in July by the most in six months _ also encouraging because consumers are major shapers of overall economic activity.

Economic growth clocked in at a 2.9 percent pace in the April-to-June quarter, slightly better than first estimated but nowhere near the brisk 5.6 percent pace logged in the first three months of this year.