- The Washington Times - Saturday, September 7, 2002


The nation's unemployment rate fell unexpectedly to a five-month low in August, as companies added jobs for a fourth straight month.

The jobless rate dropped to 5.7 percent last month, down from 5.9 percent in July and the lowest since March, the Labor Department reported yesterday. Economists had expected the rate to remain unchanged or edge up slightly.

“This is not a jobless recovery anymore,” said Sung Won Sohn, Wells Fargo's chief economist. “The doom and gloom on Wall Street has been exaggerated.”

Stocks were buoyed by the upbeat report. The Dow Jones Industrial Average rose 144 points, or 1.7 percent, to 8,427. It had dropped 141 points Thursday.

The broader market also moved higher. The Nasdaq Composite Index rose 44 points, or 3.5 percent, to 1,295. The S&P 500 gained 14.8 points, or 1.7 percent, to 894.

Companies added 39,000 jobs last month, a weak showing that was in line with what analysts expected. It marked the fourth consecutive gain in payrolls, including a revised 67,000 jobs created in July. But analysts weren't exuberant. The economy must generate 125,000 jobs per month to keep the unemployment rate stable.

“Today's data will again confound investors looking for table-pounding calls for a boom or bust economy, when a choppy, gradual and modest recovery seems most likely,” said Steven Wieting, senior economist with SSB Economics.

Hiring in construction, government and the service sector helped fuel overall job gains, although they were largely offset by cuts in manufacturing and retail.

Companies have been reluctant to make big hiring and capital-investment commitments, prime ingredients in a full and sustained comeback, because of insecurity about the recovery. Therefore, some analysts expect the jobless rate to creep up again in coming months, to 6 percent or so, though not as high as the 6.5 percent previously anticipated.

“This report is a big relief,” said Bill Cheney, chief economist with John Hancock Financial Services. Other recent indicators had been weak, raising renewed fears of layoffs and a double-dip recession.

“We can't yet lay those fears completely to rest, but it's very reassuring that we're moving forward, not slipping backward,” he said.

Most analysts do not foresee the economy sliding back into recession, but the struggle to recovery is a challenge for President Bush and will be a key topic for voters heading into the November elections.

The White House seized on yesterday's report, demanding that Congress act on Mr. Bush's terrorism insurance and retirement protection policies to help spur job growth.

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