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National jobless rate falls, easing fears of second recession
WASHINGTON -- Easing fears of a dip back into recession, the nation's unemployment rate unexpectedly fell to a five-month low in August as companies added jobs for a fourth straight month.
The jobless rate dropped to 5.7 percent last month, down from July's 5.9 percent and the lowest since March, the Labor Department reported Friday. Economists had expected the rate to remain unchanged or edge up slightly.
"This is not a jobless recovery anymore," said Sung Won Sohn, Wells Fargo's chief economist. "The doom and gloom on Wall Street has been exaggerated."
Stocks were buoyed by the upbeat report. The Dow Jones industrial average closed up more than 140 points and the Nasdaq ended the day up 44 points.
Companies added 39,000 new jobs last month, a weak showing that was in line with what analysts expected. It was the fourth consecutive gain in payrolls, including a revised 67,000 jobs created in July. But analysts weren't exuberant. The economy must generate 125,000 new jobs per month to keep the unemployment rate stable.
"Today's data will again confound investors looking for table-pounding calls for a boom or bust economy, when a choppy, gradual and modest recovery seems most likely," said Steven Wieting, senior economist with SSB Economics.
Hiring in construction, government and the service sector helped fuel overall job gains, although they were largely offset by cuts in manufacturing and retail.
Companies have been reluctant to make big hiring and capital investment commitments, prime ingredients in a full and sustained comeback, because of insecurity about the recovery. Therefore, some analysts still expect the jobless rate to creep up again in coming months to 6.0 percent or so, though not as high as the 6.5 percent previously anticipated.
"This report is a big relief," said Bill Cheney, chief economist with John Hancock Financial Services. Other recent economic indicators had been weak, raising renewed fears of layoffs and a double-dip recession.
"We can't yet lay those fears completely to rest, but it's very reassuring," he said.