Companies hire at slow pace for 3rd straight month

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Companies showed a lack of confidence about hiring for a third straight month in July, making it likely the economy will grow more slowly the rest of the year. The unemployment rate was unchanged at 9.5 percent.

Private employers added a net total of only 71,000 jobs in July, far below the 200,000 or more jobs needed each month to reduce the unemployment rate.

The modest gains were even weaker when considering a loss of government jobs at the local, state and federal levels in July that weren’t temporary census positions. Factoring those in, the net gains were only 12,000 jobs, according to the Labor Department’s July report Friday.

Investors reacted by selling stocks and shifting into more conservative Treasury bonds. The yield on the 10-year Treasury note, which helps set rates on mortgages and other consumer loans, fell to 2.85 percent from 2.91 percent late Thursday. Major stock indexes all fell and the Dow Jones industrial average dropped more than 130 points in morning trading.

The department also sharply revised down its jobs figures for June, saying businesses hired fewer workers than previously estimated. June’s private-sector job gains were lowered to 31,000 from 83,000. May’s were raised slightly to show 51,000 net new jobs, from 33,000.

“There is still a labor market recovery, but it’s a very, very weak one,” said Nigel Gault, chief U.S. economist at IHS Global Insight.

The slow pace of hiring will weigh on the recovery, he said, with economic growth in the current quarter likely to come in even lower than the April-to-June quarter’s already weak 2.4 percent.

President Barack Obama on Friday noted that the economy has now added private-sector jobs for seven straight months. He hailed that as a good sign. But he said the progress “needs to come faster.”

Overall, the economy lost a net total of 131,000 jobs last month, mostly because 143,000 temporary census jobs ended.

The “underemployment” rate was the same as in June, at 16.5 percent. That includes those working part time who would prefer full-time work and unemployed workers who’ve given up on their job hunts.

All told, there were 14.6 million people looking for work in July. That’s roughly double the figure in December 2007, when the recession began.