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Economy

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Associated Press
Applicants reach for registration forms for a career fair at Columbia University in New York. The job market looks promising – unemployment rate falling, hiring steady – but a closer look shows it’s not so strong.

Joblessness falls, but few cheer

At 7.3%, but hiring so weak as to upset Fed plan on bonds

– U.S. employers have yet to start hiring aggressively – a concern the Federal Reserve will weigh in deciding this month whether to slow its bond buying and, if so, by how much.

Employers added 169,000 jobs in August but many fewer in June and July than previously thought, the Labor Department said Friday. Combined, June, July and August amounted to the weakest three-month stretch of job growth in a year.

The unemployment rate dropped to 7.3 percent, the lowest in nearly five years. But it fell because more Americans stopped looking for work and were no longer counted as unemployed. The proportion of Americans working or looking for work reached its lowest point in 35 years.

All told, the report adds up to a mixed picture of the U.S. job market: Hiring is steady but subpar. Much of the hiring is in lower-paying occupations. And many people are giving up on the job market in frustration.

The jobs picture is sure to weigh heavily when the Fed meets Sept. 17-18 to discuss whether to scale back its $85 billion a month in Treasury and mortgage bond purchases. Those purchases have helped keep home-loan and other borrowing rates ultralow to try to encourage consumers and businesses to borrow and spend more.

David Jones, chief economist at DMJ Advisors, said he still thinks the Fed will begin slowing its bond buying later this month. But he suspects the August data and the reduced job totals for June and July will lead the Fed to trim more gradually than it would have otherwise: The Fed could start reducing its monthly purchases by $10 billion rather than $20 billion.

Jones said he expects periodic reductions of $10 billion between now and mid-2014. At that point, Chairman Ben Bernanke has said the Fed expects the bond buying could likely end.

The revised job growth for June and July shrank the previously estimated gain for those months by 74,000. July’s gain is now estimated at 104,000 – the fewest in more than a year and down from a previous estimate of 162,000.

In the past three months, employers have added an average of just 148,000 jobs. The average monthly gain for 2013 so far is 180,000, slightly below the 183,000 average for 2012.

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