DATA SNAP:US July Nonfarm Payrolls -131K; Job

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July Employment Report                    ! Consensus:          ! 
                            July    Jun   ! Payrolls:    -60K   ! 
     Payrolls               -131   -221Kr !                     ! 
     Unemployment Rate       9.5%    9.5% ! Actual:      -131K  ! 
     Hourly Earnings        $22.59 $22.55r!                     ! 
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   By Luca Di Leo and Jeff Bater 
   Of DOW JONES NEWSWIRES 
 

WASHINGTON (Dow Jones)--The U.S. economy shed more jobs than expected in July while the unemployment rate held steady at 9.5%, a further sign the economic recovery may be losing momentum.
Nonfarm payrolls fell by 131,000 last month as the rise in private-sector employment was not enough to make up for the government jobs lost, the U.S. Labor Department said Friday. Only 71,000 private-sector jobs were added last month while 143,000 temporary workers on the 2010 census were let go.
Economists polled by Dow Jones Newswires were expecting total nonfarm payrolls to drop by a smaller 60,000 in July.
The June data was revised down significantly. Payrolls fell 221,000 that month, more than the 125,000 drop previously reported, as only 31,000 jobs were added in the private sector.
Taking into account revisions to prior months this year, the U.S. economy added an average of less than 100,000 jobs a month in the first seven months, a level that's not strong enough to bring unemployment down.
The jobless rate, which is calculated using a separate household survey, held steady at 9.5% in July. Economists were expecting it to edge higher to 9.6%.
After the worst recession in decades, the recovery that began in July 2009 has recently been losing momentum, but it's hard to say if it's just a temporary slowdown or if the economy could start to contract again. The Federal Reserve may consider taking steps to support the economy when officials meet next Tuesday. Some worry that with unemployment still so high and consumer prices recently dropping, the U.S. economy runs the risk of falling into a Japan-like deflationary trap of very slow growth and falling prices.
Friday's report showed that manufacturing jobs continued to trend up, rising by 36,000 after a 13,000 increase in June. Motor vehicles and parts had fewer seasonal layoffs than normal in July, the Labor Department said. Construction, a sector of the economy that is still suffering, lost 11,000 jobs in July.
Total government employment fell by 202,000 last month, hurt by the laying off of the census workers and by 48,000 jobs lost in state and local governments, which have significant budget strains.
In a sign of the labor market's continued weakness, Friday's report showed that 45% of unemployed Americans, or 6.6 million people, were out of work for more than six months in July. The longer someone is without a job, the harder it is to find work. With time, people lose skills -- and employers are often loathe to hire someone who hasn't been working for long periods.
In a slightly positive sign, the average workweek edged higher to 34.2 hours in July from 34.1 the previous month. More hours means more pay, giving a lift to consumers' spending power.
Meantime, the report also showed that average hourly earnings of all employees increased by $0.04 to $22.59 in July.
The Labor Department's employment report can be accessed at: http://www.bls.gov/news.release/empsit.toc.htm