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July Job Creation Well Below Forecast

By John S. McClenahen Even as overall U.S. manufacturing activity continues to improve, companies are not adding jobs at the rate economists have expected. July is a case in point. Although U.S. Labor Department data released Aug. 6 show 10,000 manufacturing jobs being added to the U.S. economy during July, that total is half of the 20,000 job gain economists at UBS Investment Research had anticipated. What's more, although there were July job gains among computer and electronics producers, machinery makers, furniture manufacturers, and paper and paper product producers, employment growth among these and other manufacturers was partially offset by a loss of 21,000 jobs among automakers and auto parts producers, the Labor Department said. Total U.S. non-farm job creation in July was even more dramatically short of expectations. The economy added only 32,000 jobs last month, less than 17% of the 200,000 jobs to 250,000 jobs economists generally believed would be created. The overall U.S. unemployment rate, which is calculated from a different base than the one the Labor Department uses to figure job gains and losses, was 5.5% in July, down one-tenth of a percentage point from June's 5.6%. Despite July's low level of job generation, Chairman Alan Greenspan and his colleagues on the Federal Open Market Committee are still expected to raise the influential federal funds rate target by 25 basis points to 1.5% at their meeting on Tuesday, Aug. 10.

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