LOS ANGELES, CA (Catholic Online) - Steve Blitz, chief economist at investment research firm ITG in New York advised others to look on the bright side. The U.S. unemployment rate held above 8 percent for the 41st consecutive month.

"I'd call this a soft 163," Blitz said. "If you want to take from this the notion that the economy is not heading to a recession or something more ominous, that's fine. But if you want to take from this the idea that the economy is about to accelerate, I think that would be a big mistake."

The government's monthly jobs report comes from two separate surveys: one that looks at employer payrolls, and the other which questions households. Those two reports went in opposite directions in July, confusing the overall reading on the job market.

The report showed that the actual amount of Americans working dropped by 195,000, with the net job gain resulting primarily from seasonal adjustments in the establishment survey.

The household survey also showed 150,000 fewer Americans in the workforce. Private payrolls added 172,000 positions, while government subtracted 9,000.

Auto factories also hired 12,800 workers, but that improvement could be misleading given seasonal adjustments that may have artificially inflated the number, economists said.
"While the monthly gain is still relatively small by historical standards, it might help spark somewhat higher consumer optimism and spending," Kathy Bostjancic, director of macroeconomic analysis at The Conference Board, said in response to the recent report.

At this point, all economic reports and particularly the jobless number are viewed through the prism of how they might affect Federal Reserve action.

Chairman Ben Bernanke may add something more substantial to the conversation during the annual summit in Jackson Hole, Wyoming, later this month. The central bank's policy committee meets again in September.

"If the Fed is sitting there wondering what to do, this doesn't tell them they don't have to do anything," Blitz said. "If anything, the numbers are going to get weaker than the 163 next month."

Part of the positive market reaction, can be attributed to anticipation of more Fed intervention.

"The bottom line is that the employment report shows a strong headline reading but as we believe that most people, and importantly the (Fed), will resort to digging beneath the headlines to focus on the enormous uphill struggle facing the labor market," Andrew Wilkinson, chief economic strategist at Miller Tabak in New York says.

"The report should do little to change expectations for a further move in September from the Fed and so one can understand why equities are happy to advance," he added.

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