U.S. Economy: Job Growth Picks Up, Unemployment Drops

BY

Job growth in the U.S. picked up in August and the unemployment rate approached a five-year low, the latest in a string of reports validating the Federal Reserve's forecast that the economic slowdown will be gradual.

Employers added 128,000 workers to their payrolls, up from a revised 121,000 in July, the Labor Department said in Washington today. The jobless rate declined to 4.7 percent from 4.8 percent as separate numbers showed manufacturing expanded and consumers grew more confident as the month wore on.

The figures brought to an end the concern that the economy might be choked by a housing slump that followed 17 consecutive Fed interest-rate increases aimed at quashing inflation. The Standard & Poor's 500 Index rallied to the highest since May.

Economists opine that it’s a perfect jobs report to reflect that the economy is slowing to a moderate pace and, there is enough support from the jobs market to maintain consumer spending at a pretty appropriate level which enables the Fed doesn’t need to do more.