July job growth slowest since February

WASHINGTON -- USA-ECONOMY/JOBS (URGENT):US July job growth slowest since Feb

Employers created 92,000 jobs in July, far fewer than economists had predicted, as the unemployment rate ticked up to 4.6% from 4.5% in June, the Labor Department said Friday, a sign that economic growth is slowing.

While the job market is expanding, it's growing more slowly than last year. Average monthly job creation is 136,000 in 2007, compared with 189,000 in 2006. The July figure is down from the revised 126,000 jobs created in June.

A second report Friday said the U.S. service sector's expansion slowed in July, another indication that overall economic growth is moderating.

The Institute for Supply Management, an organization of corporate purchasing executives, said its index of business activity in the non-manufacturing sector registered 55.8 in July, down from 60.7 in June.

Readings above 50 indicate the sector is expanding, below 50 indicate contraction. Economists were expecting a reading of 59.

That report is a worrisome sign, since the Labor Department report said job growth in July was centered in the services sector, with health care accounting for more than a third of new jobs. The financial sector, restaurants and business services were also employment drivers.

The goods-producing sector of the economy, manufacturing and construction, didn't have a great month. Construction employment fell 12,000 in July and manufacturing employment dipped 2,000. Manufacturing shipments and demand have been rising in recent months, but factory employment has fallen 175,000 since the start of the year.

Construction employment is off 75,000 from its September peak. Construction layoffs are rising, but haven't been as high as expected, given the widespread slump in home construction — down about 20% the past year.

Part of the reason construction employment hasn't fallen more is because commercial real estate has been surging, though there are signs that sector may start to slow. The employment report, for example, showed a drop in both residential and commercial contstruction employment in July.