U.S. economy adds 163,000 jobs; rate rises to 8.3%

The labor market improved last month after a soft spell in the spring, with businesses creating 163,000 more jobs in a wide range of occupations from health care to manufacturing, the Labor Department reported Friday morning.

The job gains were the best since February and nearly tripled from June’s pace of 64,000. They reflected a bounce-back in hiring in such areas as auto manufacturing, where seasonal layoffs were lower than usual, as well as retail trade and hospitality. Layoffs in government were subdued at only 9,000 last month, contributing to the overall improvement in the market.

“This brings a three-month period of disappointing employment growth to an end,” said Chris Williamson, chief economist at Markit. He noted that private sector jobs are now at the highest level since December 2008, while the government workforce is at the lowest level since July 2006.

“This indicates a healthy rebalancing of the economy toward the private sector alongside a shrinking of the state’s share of the economy as government spending cuts bite,” he said.

The pick-up in job growth reported by businesses was bigger than expected and is likely to provoke a rally on Wall Street. But at the same time, it was tempered by a tick up in unemployment to 8.3 percent from 8.2 percent reported by households surveyed by the department.

The department cautioned against reading too much into the rise, saying the level of unemployment has been essentially unchanged for much of the year after dropping dramatically last fall from more than 9 percent.

July’s acceleration of job growth lifts the monthly total close to the 150,000 average of new jobs that the economy has created each month since 2011, the department said.

The improved job performance is good news for President Obama as he seeks re-election amidst a sluggish economy. White House Council of Economic Advisers Chairman Alan B. Krueger hailed the news, saying it provides “further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression.”

But Republicans focused attention on the worsening of the unemployment rate. “This much is clear: With 42 consecutive months of unemployment above 8 percent, the private sector still isn’t doing fine,’ ” said House Speaker John Boehner, Ohio Republican.

Peter Morici, business professor at the University of Maryland, said he doesn’t expect to see much improvement in unemployment despite last month’s acceleration of job growth. Thousands of people are giving up looking for work even as thousands more find new jobs, he noted.

“The U.S. economy continues to expand at a torturously slow pace, and is quite vulnerable to shock waves from crises in Europe and Asia,” he said.