Job growth cools, posing challenge for Obama, Fed

Fri Sep 7, 2012 2:39pm EDT
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By Lucia Mutikani

WASHINGTON (Reuters) - Jobs growth slowed sharply in August, setting the stage for the Federal Reserve to pump additional money into the sluggish economy next week and dealing a blow to President Barack Obama as he seeks re-election.

Nonfarm payrolls increased only 96,000 last month, the Labor Department said on Friday, below what would normally be needed to put a dent in the jobless rate. Payrolls had grown by 141,000 jobs in July.

While the unemployment rate dropped to 8.1 percent from 8.3 percent, it was only because many Americans gave up the hunt for work. The survey of households from which the jobless rate is derived actually showed a decline in employment.

"The economy is crawling up the down escalator and today's report can only give ammunition to the activist members of the Fed board to loosen monetary policy further next week," said Patrick O'Keefe, head of economic research at J.H. Cohn in Roseland, New Jersey.

The lackluster report piled pressure on Obama ahead of the November vote in which the health of the economy looms large.

While acknowledging the tepid pace of job growth, Obama laid the blame for the labor market's woes on Congress, in particular Republicans.

"If Republicans are serious about being concerned about joblessness, we could create a million new jobs right now if Congress would pass the job plans I sent to them a year ago," Obama said at a campaign rally in Portsmouth, New Hampshire.

Republican presidential nominee Mitt Romney said Obama had done nothing during his first term in office to inspire confidence among Americans in his economic policies.   Continued...

People wait in line to enter a job fair in New York April 18, 2012. REUTERS/Shannon Stapleton