US JULY NON-FARM PAYROLLS UP 92,000 VS 135,000 EXPECTED, LOWEST SINCE FEBRUARY

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US JULY NON-FARM PAYROLLS UP 92,000 VS 135,000 EXPECTED, LOWEST SINCE FEBRUARY

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Unemployment Rate Edges Up to 4.6 Percent in July As Job Growth Slows

Hiring cooled off in July, pushing the nation's unemployment up to 4.6 percent, a six-month
high.

The fresh snapshot of employment conditions around the country, released by the Labor
Department Friday, also showed that new job creation slowed. Employers increased payrolls by
92,000 last month, the fewest add-ons in a single month since February.

Job losses in construction, manufacturing, retailing and by the government blunted gains in
education and health care, professional and business services, and leisure and hospitality.

Even with the uptick from June's 4.5 percent unemployment rate, the current jobless rate is still low by historical standards. Those with jobs, meanwhile, did see modest wage gains.

The more subdued jobs picture is consistent with economists' forecasts that the economy will
grow gradually -- but not like gangbusters-- through the rest of this year. The economy has
been coping with fallout from the sour housing market, problems with higher-risk subprime
mortgages and troubles in the automotive sector.

The news comes as President Bush has been trying to counter weak public-approval ratings for his handling of the economy. Only 37 percent approve of his performance, close to a record
low, according to a recent AP-Ipsos poll.

The new employment picture was weaker than economists expected. They were forecasting
employers to add around 135,000 jobs in July and for the unemployment rate to hold steady at 4.5 percent. The new figures suggest the jobs climate wasn't as robust as first thought at the
start of the third quarter.

Wages grew modestly.

Average hourly earnings rose to $17.45, a 0.3 percent increase from June. That matched
economists' expectations. Over the past 12 months, wages grew by 3.9 percent.

Wage growth supports consumer spending, a major ingredient in healthy overall economic
activity. Still, workers pinched by high gasoline and food prices may not feel their paychecks are growing as much as they like.

Many economists expect the Fed to hold an important interest rate at 5.25 percent next week, extending a more than yearlong breather for borrowers. Before that, the central bank had
boosted rates for two years to thwart inflation.

Fed Chairman Ben Bernanke and his colleagues, however, still believe inflation is a potential
threat to the economy. One of the things they are watching closely is whether the sturdy
labor market -- which has allowed some workers to command higher wages and benefits -- could add inflationary pressures.

Out-of-control inflation shrinks paychecks, erodes purchasing power and eats into the value of
investments.

Job growth in May and June turned out to be slightly weaker than the government previously
thought.

The economy added 126,000 jobs in June, fewer than the 132,000 first reported. In May,
employers boosted payrolls by 188,000, versus 190,000 previously estimated.

The job market still remains strong, but the toll of housing slump, seesawing economic activity
and high energy prices are catching up with employers.

Construction companies slashed 12,000 jobs in July. Manufacturers shed 2,000 and retailers
cut a thousand. Some 28,000 government jobs were eliminated. In contrast, education and
health care added 39,000. Leisure and hospitality expanded employment by 22,000. Professional and business services added 26,000 new positions.

The 4.6 percent jobless rate was the highest since January, when the unemployment rate also stood at 4.6 percent.

At the start of this year, the economy nearly stalled, growing at a pace of just 0.6 percent, the slowest in more than four years. The economy rebounded in the April-to-June quarter, logging a rate of 3.4 percent, the best in more than a year. Growth in the July-to-September quarter is expected to be more subdued, possibly just under 3 percent.

Across the country, the time it took to find a job grew.

The average time the 7.9 million unemployed people spent in their job searches was 17.2 weeks in July. up from 16.8 weeks in June.

Worries about the sour housing market along with fears that problems with higher-risk subprime mortgages will spread, caused stocks to crater last week. The carnage left the Dow Jones
industrials down more than 585 points, its worst week in five years. Stocks have gyrated since
then, reflecting lingering anxiety among investors.

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Stock futures fell Friday, suggesting that the market likely would open lower, after the
government reported that fewer U.S. jobs were created in July than analysts anticipated.

Wall Street, coming off two straight days of triple-digit gains in the Dow Jones industrials,
appeared disappointed that the Labor Department said nonfarm payrolls rose 92,000 last month, less than the 132,000 jobs created in June and below the average forecast of about 135,000. Also, unemployment ticked up to 4.6 percent -- a six-month high -- from 4.5 percent in June.

Investors, still uncertain about the effect of rising subprime mortgage defaults on the broader
economy, have regarded the stable job market as a sign that the economy might survive
despite a tighter lending climate. People with steady paychecks are more likely to keep spending -- and pay back their debt.

The stock market made late-day surges both Wednesday and Thursday, but trading has been
nervous and wavering. Investors remain worried that problems in subprime mortgages --
mortgages to people with poor credit histories -- will force lenders to make credit less available.

When people and companies can't borrow money, the economy tends to slow down.

Late Thursday, lender American Home Mortgage Investment Corp. confirmed it has stopped taking mortgage applications and is laying off most of its 7,000 staffers.