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U.S. jobless rate dips despite disappointing hiring

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U.S. employers added 169,000 jobs in August and much fewer in July than previously thought. Hiring has slowed from the start of the year and could complicate the Federal Reserve's decision later this month on whether to reduce its bond purchases.

The Labor Department said Friday that the unemployment rate dropped to 7.3 percent, the lowest in nearly five years. But it fell because more Americans stopped looking for work and were no longer counted as unemployed. The proportion of Americans working or looking for work fell to its lowest level in 35 years.

Analysts had predicted the U.S. would add at least 177,000 jobs in August.

July's job gains were just 104,000, the fewest in more than a year and down from the previous estimate of 162,000. June's figure was revised to 172,000, from 188,000. The revisions lowered total hiring over those two months by 74,000.

Employers have added an average of just 148,000 jobs in the past three months, well below the 12-month average of 184,000.

Dow Jones industrial average futures rose modestly after the report was released. The yield on the 10-year Treasury note fell to 2.87 percent, from 2.95 percent, in the first few minutes after the jobs figure was released.

The weaker jobs picture could make the Fed hesitate to scale back its bond buying. The Fed's $85 billion a month in Treasury and mortgage bond purchases have helped keep home-loan and other borrowing rates ultra-low to try to encourage consumers and businesses to borrow and spend more.

Chairman Ben Bernanke has said the Fed could begin slowing its bond purchases by year's end if the economy continues to strengthen and end the purchases by mid-2014. After its September policy meeting, the Fed will announce whether it will taper its monthly purchases and, if so, by how much.

"This was a horrible set of jobs figures, starting with large revision to last month's number," said Tom di Galoma, head of fixed-income rates sales at ED&F Man Capital.

Another concern for the Fed is that most of the hiring in August was in lower-paying industries such as retail, restaurants and bars, continuing a trend that began earlier this year. About 80 percent of the jobs created this year have been part-time positions. Retailers added 44,000 jobs in August, and hotels, restaurants and bars added 27,000. Temp hiring rose by 13,000.

Manufacturers added 14,000, the first gain after five months of declines. Construction jobs were unchanged in August. .

Auto manufacturers boosted hiring in August. Some of the jobs were workers who were rehired last month after being temporarily laid off in July, when factories switched to new models.

Americans are buying more cars than at any time since the recession began in December 2007. And U.S. factories expanded in August at their fastest pace in more than two years.

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  1. The east side does have potential...and I have always thought Washington Scare should become an outlet mall. Anyone remember how popular Eastgate was? Well, Indy has no outlet malls, we have to go to Edinburgh for the deep discounts and I don't understand why. Jim is right. We need a few good eastsiders interested in actually making some noise and trying to change the commerce, culture and stereotypes of the East side. Irvington is very progressive and making great strides, why can't the far east side ride on their coat tails to make some changes?

  2. Boston.com has an article from 2010 where they talk about how Interactions moved to Massachusetts in the year prior. http://www.boston.com/business/technology/innoeco/2010/07/interactions_banks_63_million.html The article includes a link back to that Inside Indiana Business press release I linked to earlier, snarkily noting, "Guess this 2006 plan to create 200-plus new jobs in Indiana didn't exactly work out."

  3. I live on the east side and I have read all your comments. a local paper just did an article on Washington square mall with just as many comments and concerns. I am not sure if they are still around, but there was an east side coalition with good intentions to do good things on the east side. And there is a facebook post that called my eastside indy with many old members of the eastside who voice concerns about the east side of the city. We need to come together and not just complain and moan, but come up with actual concrete solutions, because what Dal said is very very true- the eastside could be a goldmine in the right hands. But if anyone is going damn, and change things, it is us eastside residents

  4. Please go back re-read your economics text book and the fine print on the February 2014 CBO report. A minimum wage increase has never resulted in a net job loss...

  5. The GOP at the Statehouse is more interested in PR to keep their majority, than using it to get anything good actually done. The State continues its downward spiral.

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