Unemployment hits lowest level in almost four years

By JEANNINE AVERSA

The Associated Press

WASHINGTON – People looking for work in health care and real estate found expanded employment opportunities in June, while factory workers continued to see jobs shrink.

After tallying all the employment winners and losers, the economy generated a net total of 146,000 jobs last month, up from 104,000 in May. The jobless rate, meanwhile, sank to its lowest level in nearly four years.

The employment snapshot from the Labor Department on Friday supported the view of Federal Reserve Chairman Alan Greenspan and his colleagues that the economy is in good shape and the labor market is gradually improving despite high energy prices.

The civilian unemployment rate dropped to 5 percent in June, down a notch from 5.1 percent in May and the lowest since September 2001. The jobless rate has drifted downward after hitting 6.3 percent in June 2003, its highest point during the economic recovery.

While various service-sector jobs gained ground in June, manufacturers eliminated jobs for the fourth month in a row, shedding 24,000. Most of those cuts came from the automobile industry.

Job losses in manufacturing were more than offset by job gains in health care, real estate, retail, financial activities and elsewhere. That highlighted the economy's different appetite for service workers on the one hand and factory workers on the other.

“We are no longer a nation of manufacturers. We are in a services dominated economy and those are the jobs that we are mostly creating,” said Richard Yamarone, economist at Argus Research Corp.

Not too many complaints

In terms of overall employment growth for June, economists were forecasting a more robust gain – of around 195,000 jobs, versus the 146,000 that were reported. Their disappointment, however, was tempered by what turned out to be better job growth in April and May. Employers added 44,000 more jobs in those two months combined than the government had previously estimated, according to revised figures released Friday.

“A lean, mean jobs machine this economy is not,” said Joel Naroff, president of Naroff Economic Advisors. “But jobs are being created and the unemployment rate is falling so you really cannot complain too much.”

For the first half of this year, job growth has averaged 181,000 a month, close to the average 183,000 jobs created each month in 2004. “That's an amazingly steady and healthy pace,” said Stuart Hoffman, chief economist at PNC Financial Services Group. “Is 180,000-plus jobs a month great? No. It is good and solid? Yes.”

Given the labor market's gradual improvement, the Fed probably will stick with its approach of modest, quarter-point interest rate increases this year to prevent high energy prices from stoking broader inflation.

The average time that the unemployed had spent searching for work in June was 17.1 weeks. That marked an improvement from the average 18.8 weeks registered in May and was the shortest duration since August 2002.

Workers' average hourly earnings, which aren't adjusted for inflation, rose to $16.06 in June. That's 2.7 percent higher than the same month last year, a pace that should help support consumer spending, the economy's lifeblood, analysts said.