Fears of a double-dip recession in the US were allayed on Friday by data showing that the private sector had created 235,000 jobs in the past 3 months.

The addition of a better-than-expected 67,000 private-sector jobs in August and upward revisions to data for the previous two months ends a run of bad data that had fed fears that the US economy could slip back into recession.

But job creation is still not strong enough to match population growth or boost the feeble economic recovery. That means unemployment will remain high, adding to the political pain for the administration of President Barack Obama amid predictions that his Democratic party could lose control of Capitol Hill in November’s elections.

The unemployment rate rose from 9.5 to 9.6% as 114,000 temporary census workers were laid off – causing overall payrolls to fall by 54,000, and more than half a million people joined the labor force.

The report comes ahead of a renewed effort by the White House to persuade voters that it is focusing on the economy.

The White House is shortly expected to unveil a package of measures that is designed to boost waning growth, which it insists will not be a “second stimulus”.

Whatever Mr. Obama proposes is highly unlikely to pass Congress before the November elections. Jobs growth is essential for sustaining the recovery because it helps boost consumer spending. The payrolls number comes after a run of data in August that suggested that the recovery might stall.

“I think the key word is ‘reassuring’. This should allay fears that America was heading for a double-dip recession,” said Paul Ashworth, senior US economist at Capital Economics in Toronto.

Investors were heartened by the data. The S&P 500 at midday was up by 0.9% after an earlier gain of 1.4%. 10 yr Treasury yields rose to 2.71%, up 8 basis points on the day.—Paul A. Ebeling, Jnr. www.livetradingnews.com

Posted by Shayne Heffernan on Sep 3rd, 2010and filed underEquities, Markets, USA.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site