Hiring picks up but not enough to sideline Fed

Fri Aug 3, 2012 8:57pm EDT
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By Lucia Mutikani

WASHINGTON (Reuters) - Employers hired the most workers in five months in July, but an increase in the jobless rate to 8.3 percent kept prospects of further monetary stimulus from the Federal Reserve on the table.

Nonfarm payrolls rose 163,000 last month, the Labor Department said on Friday, breaking three straight months of job gains below 100,000 and offering hope for the ailing economy.

"It's a relief we did not post another number like 75,000, but the reality is it's not night and day. It's not as though it brings us all the way back to being wildly optimistic," said Robert DiClemente, chief U.S. economist at Citigroup in New York.

While the report gave talking points to Republicans and Democrats for the upcoming general election, investors on Wall Street shrugged off the rise in the jobless rate to a five-month high and boosted stocks to their highest level since early May.

The unemployment rate rose from 8.2 percent in June, even as more people gave up the search for work and a survey of households showed a drop in employment.

The Federal Reserve on Wednesday sent a stronger signal that a new round of major support could be on the way if the recovery does not pick up. The labor market has slowed after hefty gains in the winter, spelling trouble for President Barack Obama in the November election.

A recent Reuters/Ipsos poll showed 36 percent of registered voters believe Republican presidential candidate Mitt Romney has a better plan for the economy, compared with 31 percent who have faith in Obama's policies.

Both Obama and Romney used the jobs report to plead their case to America's middle-class voters. Obama said the Republican tax plan would hurt them.   Continued...

Jobseekers wait to speak to a recruiter during the Gemological Institute Of America (GIA)'s Jewelry Career Fair in New York in this file photo taken July 30, 2012. REUTERS/Shannon Stapleton/Files