Aug. jobless rate hits 9.7% with businesses 'reluctant to hire'

WASHINGTON -- USA-ECONOMY/JOBS (URGENT):U.S. August payrolls fall 216,000, jobless rate 9.7%

The nation's jobless rate rose last month to 9.7% in August, the highest level since 1983 and a sign that the labor market remains weak even as the economy shows signs of recovery.

The economy also shed 216,000 jobs in August, down from a loss of 276,000 jobs in July, the Bureau of Labor Statistics said Friday. Job losses now total 6.9 million since the recession began in December 2007.

The jobs report sent "mixed messages," says Nigel Gault, chief U.S. economist for IHS Global Insight. The August unemployment rate was higher than expected and reversed a drop in July, but the number of jobs lost during the month was a little lower than expected and well below the average 560,000 jobs lost every month in the first half of the year.

"It's still a weak report," says Stuart Hoffman, chief economist at PNC Financial Services Group. "But having said that, it is showing that the rate of layoffs and the rate of job losses are starting to tail off."

The jobless rate rose partly because more workers entered the job market, apparently hoping the worst is over.

If laid-off workers who have settled for part-time work or have given up looking for new jobs are included, the so-called underemployment rate reached 16.8%, the highest on records dating from 1994.

There are now 14.9 million Americans unemployed.

Wages rose 6 cents to $18.65 an hour — "a bit of a surprise since we do have a lot of people looking for work," says Joel Naroff of Naroff Economic Advisors. A higher minimum wage took effect at the end of July.

The average workweek remained at a lackluster 33.1 hours – a key number because employers are reluctant to hire new workers when they can schedule more hours for existing staff.

Recent reports have suggested the economy is starting to recover. The Institute for Supply Management reported Tuesday that manufacturing expanded in August for the first time in more than a year and a half. Home sales are also showing signs of recovery.