U.S. Economy Adds Jobs; Unemployment Drops

Employers added 128,000 jobs to their payrolls in August, and the unemployment rate fell to 4.7 percent. The Labor Department's monthly employment report presents a picture of an economy that is still expanding, but at a more moderate pace.

Economists say the gradual slowdown indicates the Federal Reserve seems to be succeeding in keeping inflation in check without choking off job growth.

Wall Street cheered the jobs report, as stocks rose on word that the economy is growing — but not growing too fast.

More than a quarter of the 128,000 new jobs created last month were in healthcare. And after years of staying pretty flat, average wages for U.S. workers are up 3.9 percent from last year, before adjustments for inflation.

But the elephant in the room for many economists is the national housing market. Most don't see a broad crash coming. But if that happens — as some think it might — it would mean severe layoffs of construction workers, realtors, and people in the mortgage industry, as well as a jolt to consumer confidence.

Payrolls Grow in August, Jobless Rate Drops

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

The latest snapshot, released Friday by the Labor Department, 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.

Still, there are obvious weak spots: Construction spending plunged in July by the largest margin in nearly five years, the Commerce Department reported, another sign of the cooldown in the once sizzling housing market.

In another report, the Institute for Supply Management said the manufacturing sector grew at a slower clip in August than in July.

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 an additional 121,000.

"Today's (employment) 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.

Copyright 2006 by The Associated Press. All Rights Reserved.



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