Unemployment Rate Dips

(AP)  Hiring around the country picked up slightly in June with employers adding 146,000 jobs — helping to push the unemployment rate down to 5 percent, the lowest in nearly four years.

The latest snapshot of the nation's jobs climate, released by the Labor Department on Friday, supported the view of Federal Reserve Chairman Alan Greenspan and his colleagues that the labor market continues to improve gradually.

The modest payroll gain of 146,000 jobs in June was up from 104,000 net jobs added in May. Payroll growth for both April and May turned out to be better than the government previously reported. Still, the strength of job growth seen in June was likely to disappoint economists. Before the release of the report, they were forecasting a more robust increase of around 195,000 jobs for the month.

"It all suggests that the labor market is improving a bit. But it's kind of anemic compared with what we were expecting. It really does validate the Fed's view. There is a gradual improvement in the labor market. But it is very gradual," said William Cheney, chief economist at John Hancock Financial Services.

Manufacturers shed jobs in June for the fourth month in a row. Job growth slowed in retailing but picked up briskly in professional and business services, and in the leisure and hospitality field.

The 5 percent civilian unemployment rate, meanwhile, was down a notch from the 5.1 percent registered in May. It matched the jobless rate in September 2001 and was bested only by a 4.9 percent unemployment rate in August 2001.

The Federal Reserve, wanting to keep inflation in check, lifted a key interest rate by one-quarter percentage point to 3.25 percent last week. Fed policymakers suggested the economy and the job market are in good shape despite the toll of high energy prices.

"Although energy prices have risen further, the expansion remains firm and labor market conditions continue to improve gradually," Fed policymakers said last week.

Oil prices surged to $61.28 a barrel on Wednesday, a closing price that marked a new record high.

Still with the labor market improving gradually rather than by leaps and bounds, economists said Friday's report justifies the Fed staying on its course of modest, quarter-point interest rate increases this year.

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