U.S. jobless rate staying steady at 4.5 percent

Associated Press

WASHINGTON — The yearlong slide in factory jobs slowed a bit and service jobs gained some ground in July, holding the nation’s unemployment rate steady at 4.5 percent.

While the better-than-expected showing in the Labor Department’s report offered a glimmer of hope, analysts said, dangers still remain for the economy, which has been mired in a slowdown for a year.

"We certainly are not out of the woods yet. The economy is very, very soft, but perhaps one can sense the rate of decline in the economy is slowing," said Mark Zandi, chief economist for Economy.com. "It may be the economy is nearing the end of the worst of its problems."

Although payrolls fell for the second month in a row, the drop wasn’t as big: 42,000 jobs were eliminated in July, compared with 93,000 in June. Manufacturing led July’s decline, but the loss of factory jobs was the smallest since December.

"This is the first sign that the hemorrhage of job losses in manufacturing is beginning to ease," said Jerry Jasinowski, president of the National Association of Manufacturers, whose industry has been bearing the brunt of the slowdown.

Hiring by service firms and state and local government tempered the loss of factory jobs and helped keep the jobless rate at 4.5 percent last month, surprising economists who predicted unemployment would climb to 4.7 percent.

Labor Secretary Elaine Chao said the fact that the jobless rate was unchanged "suggests some stability in the economy."

The jobless rate has remained at 4.5 percent for three of the last four months. While it represents the highest unemployment level reached during the slowdown, the rate is still low by historical standards.

However, many economists predict the unemployment rate, which is considered a lagging economic indictor, will rise in the months ahead, possibly passing 5 percent by year’s end.