Jul Employment Report ! Consensus: !Jul Jun ! Payrolls: +150K...

Jul Employment Report ! Consensus: !
Jul Jun ! Payrolls: +150K !
Payrolls +113K +124Kr ! Actual: +113K !
Unemployment Rate 4.8% 4.6% ! Jobless Rate: 4.6% !
Hourly Earnings $16.76 $16.69 ! Actual: 4.8% !
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By Brian Blackstone
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--U.S. payrolls posted their fourth-straight tepid gain last month and the jobless rate spiked higher, giving Federal Reserve officials greater flexibility to pause their two-year tightening campaign at next week's meeting of the Federal Open Marke
Non-farm payrolls grew 113,000 last month after climbing 124,000 in June and 100,000 in May, the Labor Department said Friday. Previous estimates showed a
121,000-job increase in June and a 92,000 gain in May.
The unemployment rate climbed last month to 4.8% - matching the highest level since December 2005 - from 4.6% in June. That 0.2-point rise is the fastest since October
2001, according to the Labor Department.
Average hourly earnings rose $0.07, or 0.4%, to $16.76. Compared with a year earlier, July hourly earnings were up 3.8%.
The payrolls data were below Wall Street expectations. The median estimate of 22 economists polled by Dow Jones Newswires and CNBC had projected a 150,000 payroll
increase and a 4.6% unemployment rate.
Wage growth slightly topped expectations, as economists had expected a 0.3% monthly gain in average hourly earnings.
The Labor Department report suggests that the U.S. economy entered the third quarter on a decidedly soft tone. After expanding at a red-hot rate of 5.6% in the first
quarter, the economy expanded just 2.5% in the second quarter. Economists generally peg the economy's noninflationary growth rate at 3% to 3.5%
The latest jobs figures could give Fed officials the ammunition they need to keep rates steady next week in order to give them more time to gauge the economic and inflation
outlook. The FOMC meets Tuesday, and Friday's jobs report is that last major indicator before that meeting.
The Fed has raised rates 17 straight times since mid-2004, pushing the Fed funds rate to 5.25%. But remarks by Fed officials, including recent Congressional testimony
from Fed Chairman Ben Bernanke, have fueled hopes for a pause next week, even though inflation remains above the Fed's comfort zone. Officials contend that a slowing
economy should ease pressure on inflation over time.
The Labor Department said hiring last month in goods-producing industries fell by 2,000. Within this category, manufacturing firms shed 15,000 jobs. Construction added
6,000 jobs.
Service-sector employment grew by 115,000. Retail payrolls were flat, while business and professional services companies' payrolls increased by 43,000. Education and
health services added 24,000 jobs.
The average work week was unchanged at 33.9 hours.
-By Brian Blackstone; Dow Jones Newswires; 202-828-3397; [email protected]
(END) Dow Jones Newswires
August 04, 2006 08:30 ET (12:30 GMT)