Unemployment rate shows US 'upturn is nothing great'
Unemployment rate watchers noted that summer is traditionally a slow season for hiring, but the economy continues to show signs of slow progress. The unemployment rate stayed at 9.5 percent in a jobs report issued Friday.
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Republicans quickly jumped on the disappointing July employment numbers. House minority leader John Boehner called the report “another disappointing report.” He added: “It’s time for President Obama to listen to the American people and face up the fact that his ‘stimulus’ policies aren’t working.”Skip to next paragraph
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At noon, Mr. Obama made a statement about the economy at Gelberg Signs, a Washington small business that is adding workers.
“The road to recovery does not follow a straight line,” said Obama, who noted the private sector has added jobs for seven consecutive months. But Obama added new jobs are not coming nearly fast enough. “We need to speed our recovery so it reaches people now,” he said, promoting his plan for a jobs bill for small business.
Reasons for cautious optimism
Some economists believe the slow hiring in the private sector is the result of some temporary factors that may improve in the months ahead. For example, Congress did not renew the housing tax credits and the tax credit for purchasing energy efficient appliances. Since then retail sales have been lackluster, observes Richard DeKaser of Woodley Park Research in Washington.
“If the reason they are weak is tax and benefit related, we have reason to be optimistic,” says Mr. DeKaser. “The declines are just temporary pot holes following the diminished use of tax incentives.”
DeKaser says the slower US economic activity also coincided with the financial crisis in Europe. Since July he notes the concern over the possibility of European defaults has diminished.
“My interpretation is that the slowdown reflects factors that are unlikely to persist,” says DeKaser.
In fact, this week the Institute for Supply Management reported its service sector-index rose more strongly than expected in July. At the same time, a survey by the accounting firm KPMG found 45 percent of US manufacturing executives said they expected a “significant” hiring pickup in their firms in the next 12 months compared with 34 percent in February.
“That’s a pretty substantial leap,” says Mike Nolan, head of US and global risk and compliance at New York-based KPMG. “Our survey indicates positive momentum, and I think the key message is that there is sustained optimism leading to increased confidence. So, when I look out 12 months, I see increased hiring.”
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