Solid US job gains could bolster 2nd-half growth

[August 02, 2013]  WASHINGTON (AP) -- Robust hiring in July would mark a fourth straight month of solid gains, an encouraging sign for a U.S. economy that is still struggling with high unemployment.

Economists predict that employers added 183,000 jobs -- a figure that would show that businesses are growing more confident despite weak economic growth. More jobs would boost consumers' ability to spend, allowing for stronger growth in the second half of the year.

The unemployment rate is expected to have dipped last month to 7.5 percent from 7.6 percent. The Labor Department will release the report at 8:30 am EDT Friday.

The Federal Reserve will pay particularly close attention to the report. Many economists think the Fed could begin scaling back its $85 billion monthly bond purchases later this year if the economy and job market continue to strengthen.

Hiring has improved this year. Employers have added an average of 202,000 a month since January, up from an average of 180,000 in the previous six months.

Yet economic growth remains sluggish. The economy grew at a subpar 1.7 percent annual rate in April-June quarter, the government said Wednesday. While that was an improvement over the previous two quarters, it's still far too weak to rapidly lower unemployment.

Recent data suggest that the economy could strengthen in the second half of the year.

A survey Thursday showed that factories increased production and received a surge of new orders in July, propelling the fastest expansion in more than two years. Factories also hired workers at the fastest pace in a year.

The survey, by the Institute for Supply Management, also showed that the housing recovery is spurring more output by lumber companies, furniture makers and appliance manufacturers.

Businesses have ordered more industrial machinery and other equipment for four straight months. Europe's troubled economies are showing signs of recovery, potentially a lift to U.S. exports.

U.S. automakers are reporting their best sales since the recession, a sign that Americans are confident enough in their finances to make large purchases. Car sales rose 14 percent in July from 12 months earlier to 1.3 million.

Healthy sales have encouraged more hiring by Ford Motor Co. The company said last week that it will hire 800 salaried professionals this year, mostly in areas such as information technology, product development and quality control.

The steady job growth this year has been supported by the comeback in the housing industry. Home prices and sales have been improving. In June, Americans bought new homes at the fastest pace in five years, a trend that could spur more construction and generate higher-paying jobs. So far this year, most of the added jobs have been in lower-paying areas, such as restaurants, bars and retail stores.

The strong job growth this year has begun to increase average pay after years of stagnation. Average hourly pay rose at an annual rate of 3.1 percent in the April-June quarter, according to Joe Carson, an economist at Alliance Bernstein. That's likely one reason consumer confidence has risen in recent months.

[Associated Press; By CHRISTOPHER S. RUGABER]

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