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US Jobless Rate Falls - 2003-08-01

New figures show the U.S. jobless rate fell in July but the economy failed to create any new jobs and in fact lost 44,000 jobs as discouraged workers dropped out of the labor. Financial markets were disappointed with the latest figures.

The unemployment rate fell to 6.2 percent, a 0.2 percentage point decline, and the first improvement in over a year. However, the improvement was caused by an exodus of workers from the labor force. Jay Bryson, an economist at Wachovia Securities in North Carolina, says the labor department report is disappointing. Financial markets had anticipated job growth of 10,000 workers instead of the actual job loss of 44,000.

This is the 6th consecutive month in which the U.S. economy has lost jobs. Usually at this stage of economic recovery the economy is creating jobs at a fast pace. The recovery began in November 2001 following a mild 8 month long recession. Since early 2001 the economy has lost 2.6 million jobs.

Nonetheless, Robert Bennett, the Republican chairman of the Congressional Joint Economic Committee, says the decline in the unemployment rate is encouraging.

"The lagging indicator of unemployment is modest in moving from 6.4 to 6.2 percent. But it is moving in the right direction. The number of jobless claims is down. Basically what we did last month was recover the unemployment figures of the month before."

Mr. Bennett spoke on CNBC television.

Earlier this week the government reported that the economy registered faster than expected growth in the second quarter of the year, with the gross domestic product expanding at a 2.4 percent annual rate. Market analysts had expected only 1.5 percent growth.

The stock market has been rising since March, a move generally regarded as a sign of faster growth ahead. Companies have mostly recovered from the over capacity problems that accompanied the high-tech boom of the late 90s and corporate profits are beginning to improve. Analysts say the basic problem now is that the United States is experiencing a jobless recovery.