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Unemployment rate falls, easing fears of economic slump

WASHINGTON - It wasn't exactly a national jobs fair, but more employers hung out ''Help Wanted'' signs in August.

The hiring revival was sufficient to ease fears of an economic slump.

''Goldilocks may be coming. The economy is not too hot nor too cold,'' Carl Tannenbaum, chief economist at LaSalle Bank, said Friday after the government reported the nation's unemployment rate had edged down to 4.7 percent in August.

The Labor Department's latest snapshot was a bit brighter than expected.

Employers boosted payrolls by 128,000 in August, an improvement over the 121,000 jobs created in July. Schools, hospitals, financial firms, computer-design shops and construction companies were among those posting employment gains last month. That helped to blunt job cuts in manufacturing, retailing, trucking and elsewhere.

''This provides some peace of mind,'' said Oscar Gonzalez, economist at John Hancock Financial Services.

On Wall Street, the employment news lifted stocks. The Dow Jones industrials gained 83 points to close at 11,464.15.

With hiring improving, the unemployment rate dropped down a notch from a five-month high of 4.8 percent in July. That decline put the current unemployment rate close to a five-year low of 4.6 percent reached in May and maintained in June.

The jobless rates for blacks in August dipped to 8.8 percent, the lowest since July 2001. The unemployment rate for Hispanics held steady at 5.3 percent.

Although economists pointed to the employment figures as evidence that the economic expansion, which began in late 2001, remains intact, there is an obvious weak spot.

Construction spending plunged in July by the largest margin in nearly five years, the Commerce Department reported, another sign of the cool down in the once sizzling housing market.

A report from the Institute for Supply Management, meanwhile, showed manufacturing activity in August expanding at a slower - but still decent - clip than in July. That's consistent with the moderate growth seen in the overall economy.

The latest batch of economic news comes as the nation's work force gets ready to celebrate the Labor Day holiday and as the election season looms.

Economic conditions are likely to be on voters' minds when they go to the polls in November.

''The economy is a top concern for many voters in America, although there are other salient issues like the war in Iraq and terrorism,'' said Costas Panagopoulos, a political science professor at Fordham University. How people vote is shaped by how they are faring economically.

The Bush administration, whose officials blasted the airwaves Friday to tout the president's economic policies, contends Americans are doing better. Rival Democrats say many are struggling.

''We enter this Labor Day holiday with .... a strong economy that is producing steady, consistent gains for America's workers,'' said Labor Secretary Elaine Chao.