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US adds 209,000 jobs, unemployment rises to 6.2%

Job seekers check out opportunities at a job fair in Chicago, Illinois, on June 12, 2014
Job seekers check out opportunities at a job fair in Chicago, Illinois, on June 12, 2014

The US economy generated 209,000 new jobs in July, down from June but maintaining the solid 200,000-plus monthly streak since February, the Commerce Department said Friday.

The unemployment rate rose only by 0.1 points to 6.2 percent, still near its lowest level since October 2008 and well down from the 7.9 percent at the start of 2013.

New jobs were well-spread between the construction, manufacturing, professional service and retail sectors, and got a boost as well from 11,000 new jobs in the government sector.

Nevertheless, the number of unemployed rose by nearly 200,000 to 9.67 million, in part because of the constant increase in the number of working-age Americans, as well a return to the labor force by 141,000 people who had dropped out and were not previously counted as unemployed.

Harm Bandholz of UniCredit pointed out that the growing return of dropouts has added more than a half-million people to the labor force over the past six months.

"This is fundamentally a very positive development, even as it puts some upward pressure on the official jobless rate," he said.

Even so, average weekly earnings ticked up only slightly, suggesting, as the Federal Reserve said Wednesday, that there is still slack in the labor market despite the steady gains in job creation.

The July job creation number was only slightly below what economists had expected, while the department revised higher June's new jobs figure to 298,000.

That left the average since January at a respectable 223,000 jobs created per month. It was the first time since 1997 that the economy had added more than 200,000 jobs a month for six months straight.

Even so, that had more impact in 1997, when the population was smaller. There were still significant signs of economic weakness in the figures.

Besides the slow wage growth, the rate of participation in the labor force was 62.9 percent, nearly the lowest in decades; the number of long-term unemployed, a particular worry for policy-makers, ticked up to 3.2 million; and the number of people working part-time because they could not find full-time jobs was flat at 7.5 million.

Those numbers are important as economists and policy-makers debate whether the economy is accelerating and inflation is picking up, which would mandate tighter monetary policy from the Federal Reserve.

On Wednesday official data showed the economy grew a fast-paced 4.0 percent in the second quarter. But that was mainly a rebound from the 2.1 percent contraction of the first quarter, and economists expect the economy is already decelerating from the second-quarter pace.

US unemployment
Monthly US unemployment since July 2013 (45 x 46 mm)

The policy debate has focused on the question of whether the labor market is tightening, which would add to inflation.

"We can debate measures of slack all day. But the fact is, there's basically no inflation or wage pressure," University of Michigan economist Justin Wolfers said in a tweet.

Economist Chris Williamson of Markit said he expects, in fact, the job creation numbers to slow.

"With companies reporting growing uncertainties to the business outlook, it's perhaps not surprising that the rate of job creation is showing sign of cooling and could continue to ease in coming months."

US markets, on edge for any sign of inflationary pressures, reacted modestly to the new data. Stocks, which plunged two percent on Thursday, were generally flat, with the S&P 500 down a bare 0.1 percent in early trade.

The dollar, which had steadily climbed against the euro over the past two weeks, slipped to $1.3413 per euro. compared to $1.3389 late Thursday.