WASHINGTON (Reuters) - U.S. employment growth accelerated more than expected in July, threshing machines up to fears the economy was introduced into a new recession, and the Federal Reserve little 'breathing.
Non-farm wages rose 117,000 after slowing sharply in the last two months, the Labor Department data showed Friday. The increase beat economists' expectations for a gain of 85 000.
Nestled in the unemployment rate 9.1 percent 9.2 percent in June, but was discouraged because of job-seekers gave up hunting. However, the report was encouraging after last week's disappointing data intensive.
"This shows that the U.S. economy is not dead yet. We have the opportunity to get back on track with a moderate growth of a strong recovery next year," said Kurt Karl, head of economic research and consulting, Swiss Re in New York.
The number of payroll for May and June were revised to show 56,000 jobs were added in the months that previously reported, helping to improve the content of the report.
High commodity prices and supply disruptions wrought by Japan from the recovery that started in the first half and left the economy vulnerable to another recession in just two years after the worst U.S. recession since 1930 ended.
Some economists put the chances of a recession to 40 percent.
Fears of U.S. recession and Europe's inability to control their debt crisis have concerned the spread of global financial markets. The data initially helped the losses from the wrath of world stocks fell to an eight consecutive games before worrying quickly took over again.
Wall Street shares opened higher, but gave up the gains from trade lower in the morning. Prices of U.S. Treasury bonds decreased, while the dollar weakened broadly as investors showed little appetite for risk. However, gold prices rose as a sign of risk aversion is far from dissipated.
UGLY DEBT FIGHT
While private employers showed a renewed appetite for hiring last month, there are worries their enthusiasm may have been dampened by the nasty battle between Democrats and Republicans during the talks to increase its ceiling debt.
Analysts fear that this could hinder the growth of jobs in August.
"The battle over the debt ceiling has created a new environment filled with uncertainty and anxiety that will cause companies to change their clothes, so to speak, and either reduce the rent, hiring freezes, or cut the wage bill, "said Tony Crescenzi, a portfolio manager at Pimco in Newport Beach, California.
The private sector accounted for all jobs created in July, with the wages in the industry totaled 154,000 - an increase of 80,000 in June to increase, and more than 115,000 expected by economists. The government wage bill fell 37,000 ninth consecutive monthly decline.
The poor health of the economy has eroded the popularity of President Barack Obama among Americans and could hurt their chances of reelection.
Speaking to veterans of the Navy Yard in Washington, Obama called on Congress to act to help the economy when lawmakers return to the summer break in September - call for the extension of the tax cut on wages and unemployment benefits emergency.
"There is no doubt that this has been a tumultuous year. We will get through this, things will get better and we will do together, "he said.
The opposition Republican legislators renewed calls to cut public spending and reduce the regulatory burden for companies like the recipe for economic problems.
Nation borrowing limit was raised this week in a deal that is claimed cuts. The fiscal tightening comes at a time when the Fed has a limited arsenal to defend the economy.
The Federal Reserve cut interest rates to zero, and spent $ 2.3 trillion of bonds. Decision-makers, who meet on Tuesday, said he wanted to see how the economy fares before any further action, and data to meet their growth forecasts for the withdrawal.
Economists say the budget cuts and the timetable for the end of the cut payroll, and emergency support for the unemployed could cut more than a percentage of GDP next year.
EYE ON THE FED
When the threat of budget cuts in the level of federal government and state and local governments to tighten their belts further burden of job creation in the private sector.
"Public sector job cuts are really designed for growth and the debt ceiling makes it clear that the belt tightening will continue to curb the activities for a long time," said Joel Naroff, Naroff Economic Advisors chief economist at the Netherlands, Pennsylvania.
"Monetary policy has to rely on the wind, and means (the Fed), it may mean next week, which is ready to keep prices low for longer than was expected."
With the exception of government, employment growth has been distributed to the board last month. The wage bill increased manufacturing 24,000 after rising 11,000 in June Most of the gains come from the automotive sector. Employment in construction increased in 8000 after falling in June 5000.
Temporary help jobs increased slightly, breaking a string of three consecutive drop in a hint that the more permanent could be in store.
The average workweek held steady at 34.3 hours, but the average hourly wage rose 10 cents stronger.
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