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U.S. employers add 209K jobs; rate rises to 6.2 percent

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U.S. employers extended their solid hiring into July by adding 209,000 jobs. It was the sixth straight month of job growth above 200,000, evidence that businesses are gradually shedding the caution that had marked the 5-year-old recovery.

July's gain was less than in the previous three months, though, and probably wasn't strong enough to intensify fears that the Federal Reserve will soon raise interest rates to curb inflation.

But the Labor Department's monthly jobs report Friday pointed to an economy that has bounced back with force after a grim start to the year and is expected to sustain its strength into 2015. Along with the consistent job growth, consumer spending is rising, manufacturing is strengthening and auto sales are up.

In early trading Friday morning, stock market indexes were mixed. The yield on the 10-year Treasury note dipped, suggesting less concern about a Fed rate increase.

The unemployment rate ticked up in July to 6.2 percent from 6.1 percent as more Americans started looking for work. Most didn't find jobs, but the increase suggests that they're more optimistic about their prospects. The jobless aren't counted as unemployed unless they're actively seeking work.

Average job gains over the past six months reached 244,000 in July, the best such average in eight years.

"Job growth slowed in July after heated gains in the past three months," Sal Guatieri, senior economist at BMO Capital Markets, noted in a research note. "But hiring trends remain solid, reflecting a strengthening economy."

The pickup in hiring has yet to translate into larger paychecks for most Americans, a key factor that has hobbled the recovery. In July, average hourly earnings ticked up just a penny, to $24.45. That's just 2 percent higher than it was 12 months earlier and is slightly below current inflation of 2.1 percent. In a healthy economy, wages before inflation would rise 3.5 percent to 4 percent annually.

The proportion of working-age adults who either have a job or are looking for one rose slightly in July from a 35-year low, to 62.9 percent. It was the first increase in four months.

Weak pay gains are restraining the housing market, usually a key driver of growth. A measure of signed contracts to buy homes slipped in June, the National Association of Realtors said this week. That suggests that home sales will decline in coming months.

The weak pay growth suggests that "the labor market still has far to go before it is fully healed," Michael Dolega, senior economist at TD Economics, wrote in a note to clients. "Lack of wage gains leaves the Fed with a strong case for keeping rates low for the next several quarters."

Still, Friday's report echoes other data that point to an improving economy. Growth accelerated during the April-June quarter, the government said Wednesday, after contracting sharply in the first three months of the year. Last quarter's rebound assuaged fears that growth was too weak to support this year's rapid hiring.

And on Friday, the government said consumer spending and income picked up in June. A separate report showed that manufacturing expanded in July at the fastest pace in more than three years as new orders surged, production rose and factories ramped up hiring.

Investors remain anxious about whether the broad economic gains will lead the Fed to raise its benchmark short-term rate sooner than expected. Such fears likely contributed to Thursday's 317-point plunge in the Dow Jones industrial average — its worst day since February.

In addition to reporting July's solid gain, the government on Friday revised up its estimate of the job increases in May and June by a combined 15,000.

Higher-paying jobs showed strong increases in July. Manufacturing added 28,000 jobs, the most in eight months. Construction added 22,000 and financial services 7,000, its fourth straight gain.

In the April-June quarter, the economy expanded at a seasonally adjusted 4 percent annual rate after a steep 2.1 percent contraction in the first quarter. Americans stepped up their spending, particularly on autos, furniture and other big-ticket items. Businesses also spent more on plants, office buildings and equipment.

Americans are also gradually gaining confidence in the economy, which means spending could accelerate in coming months. The Conference Board's consumer confidence index jumped to its highest level in nearly seven years in July.

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  • investment?
    MarkusR … the definition of investment is the voluntary outlay of money with the object of making a profit. Forcibly taking tax payer money and handing it over to union backed corporations for use in not-for-profit government ventures does not fall into the category of investment. Coercion … maybe?
  • Restore public sector employment
    If States such as Indiana actually hired back all the public sector workers they have let go (teachers, police, fire) and increased investment in our public infrastructure, the unemployment rate would be a lot lower, and the nation itself would have a millions of more jobs.
    • Here you go, Brett
      Like this story IBJ ran yesterday: http://www.ibj.com/article?articleId=48832
    • Economy is Great
      Our economy is booming and all is good.....because Obama says so. funny how media always reports 'x' numbers of jobs created this month, as if anyone can make sense of that. how about reporting the number of those leaving the workforce and giving up hope of finding a job. How about making a note of what types of jobs being created. two part time jobs is not better than one full time job paying more. yet thats exactly what is resulting from liberal policy. http://www.shadowstats.com/alternate_data/unemployment-charts http://www.zerohedge.com/news/2014-04-29/real-unemployment-rate-20-american-families-everyone-unemployed

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      1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

      2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

      3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

      4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

      5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

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