U.S. Economy Still Sputtering

The job market remains stuck in low gear, offering few prospects to the unemployed. The economy lost 131,000 jobs in July and the unemployment rate remained stuck at 9.5 percent. There was a slight uptick in private sector hiring, but that was more than offset as temporary federal census jobs lapsed and cash-strapped states and cities laid off workers. Jim Zarroli

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The U.S. economy is sputtering. That's the message from the latest monthly jobs report out today. The Labor Department said private sector employers created just 71,000 jobs last month, not even enough to keep pace with population growth.

NPR's Jim Zarroli reports.

JIM ZARROLI: The report says the U.S. economy lost 131,000 jobs last month. The drop was so big in part because so many temporary census jobs ended, leaving a lot of people out of work.

But even if you just looked at the private sector, it was still a weak report, says Heidi Shierholz of the Economic Policy Institute.

Ms. HEIDI SHIERHOLZ (Economist, Economic Policy Institute): This is a disappointing report. It really showed a snapshot of a labor market on pause.

ZARROLI: About the best thing that could be said about the report was that the total unemployment rate held steady at 9.5 percent. But that was mainly because 181,000 people grew so discouraged about finding work and stopped looking. And so, they no longer show up on the government's unemployment rolls.

Dr. SUNG WON SOHN (Economics, California State University): Some of the potential employees are saying it's a waste of time to look for work, so I'm going to drop out of the labor force and they don't count.

ZARROLI: Sung Won Sohn is a professor of economics at California State University. On the whole, the labor market is growing again and has been doing so all year. Private employers have added 630,000 jobs so far.

President Obama chose to emphasize the positive during an appearance at a small sign company in Washington.

President BARACK OBAMA: The fact is we've now added private sector jobs every month this year, instead of losing them as we did for the first seven months of last year.

ZARROLI: The president also pointed out that manufacturing jobs grew again last month. But the president acknowledged that the job growth is still slow.

Pres. OBAMA: For America's workers, families and small businesses, progress needs to come faster.

ZARROLI: There were other parts of the report that don't bode well for the future. When the economy is improving, employers usually start hiring temporary workers. And so hiring in the sector is seen as a harbinger of job growth.

But last month, the number of temporary jobs fell slightly. At the same time, hiring by government fell significantly. State and local officials are facing severe budget pressures in many places, and they're laying off teachers, police officers and other municipal workers.

Economist Heidi Shierholz says that will add to the pressures facing the economy.

Ms. SHIERHOLZ: The private sector is going to have to grow that much faster to make up for the losses that we're seeing at the state and local level. And we're just not seeing the private sector poised to be able to do that right now.

ZARROLI: This week, the Senate passed a $26 billion aid package to states and school districts that should help stem some layoffs. But today's report suggests that a lot more will be needed to get the job market growing again.

Jim Zarroli, NPR News, New York.

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