Hiring Increases, But Jobless Rate Inches Up to 8.3 Percent

Business employment specialist Linda Reynolds helps job searcher D'Andre Preston at WorkSource Oregon on July 17, 2012, in Tualatin, Ore.

The national unemployment rate inched up slightly to 8.3 percent for the month of July, according to the latest monthly jobs report from the Labor Department.

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Though the headline number ticked upward, the economy also added far more jobs than expected, with 163,000 new jobs last month—the most in five months. Economists surveyed by Bloomberg, for example, had predicted a bump of 100,000 jobs.

Still, a stubbornly high unemployment figure is a troubling sign. Job troubles have recently been far-reaching, with no particular industry showing encouraging growth, says Brad Sorensen, Director of Market and Sector Research at Schwab.

"I don't know that there's any specific industry that is looking particularly strong at this point in time, unfortunately," he says. Likewise, he adds there aren't industries that are looking particularly abysmal. "There are pockets, but really, in general, it's really just broad-based."

According to the figures, professional and business services added 49,000 jobs last month, with education and health services adding 38,000 and leisure and hospitality growing by 27,000 jobs. Manufacturing also posted solid growth, at 25,000 jobs.

Meanwhile, government and construction saw declines, losing 9,000 and 1,000 jobs, respectively.

Still, there may be hopes for a boost in construction jobs. Recent improvements in home prices provide some encouragement that this industry hit hard by the recession will be able to boost employment soon.

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"We have seen housing start to improve," says Sorensen. "And it's not going to be a quick improvement or a really sharp improvement. [But] we have seen new home sales start to improve, and that should lead to new homes starting to be built."

A recovery in housing, of course, would not only boost construction jobs but could provide some of the momentum the economy needs to start adding enough jobs consistently to bring the unemployment rate down.

Still, drags on the economy remain, in the form of an ever-present European debt crisis and an impending "fiscal cliff" as Bush-era tax cuts expire and mandated spending cuts kick in if Congress fails to act by January. Many businesses cite uncertainty over what will happen as a reason for the slow pace of hiring this summer.

Because it comes after the Great Recession and amidst an excruciatingly slow recovery, the lead-up to the cliff may not in fact cause many job losses; rather, it will just mean that uncertain employers will be leery of adding very many new workers to their payrolls, says one expert.

"When people leave [their jobs] today, they have to be replaced. Companies are as lean as they possibly can be right now," says Dave Campeas, president and CEO of recruitment services firm PrincetonOne. While companies may not add lots of new positions in the coming months, he says, they also may be hard-pressed to eliminate positions.

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Still, the nearly 12.8 million unemployed Americans would surely like to see employers doing more. The key, according to Brian Hamilton, CEO of financial information company Sageworks, is Washington tackling its deficit problems.

"Everybody knows that too much spending is the big problem – so big that no one wants to face it," he says. "But the lingering effect of not doing anything is that everyone is nervous. And when consumers and businesses are skittish about spending, companies throughout the U.S. will remain too nervous to hire."

Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter at @titonka or via E-mail at dkurtzleben@usnews.com.

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