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updated 9/3/2010 2:20:46 PM ET 2010-09-03T18:20:46

Private employers hired more workers than expected in August, lifting hopes for the weak U.S. economy, but the nation’s unemployment rate rose for the first time in four months, suggesting the economy will struggle to grow through the rest of the year.

Private employers added a total of 67,000 jobs last month, according to the Labor Department’s August jobs report released Friday. That number was below the amount of jobs needed to keep up with population growth, but was better than expected. Both July and June’s private-sector job figures were upwardly revised.

Overall, the economy lost 54,000 jobs in August, partly because 114,000 temporary census positions came to an end. State and local governments shed 10,000 positions.

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The unemployment rate for August ticked up to 9.6 from 9.5 percent in July, rising for the first time in four months. More than a half-million Americans resumed their job searches in August, which drove up the jobless rate. When the unemployed stop looking for work, they are no longer counted in the jobless rate. It’s the first time the labor force has grown since April.

Despite a better-than-expected private employment number for August, the economy is not out of the woods yet and the jobs market is likely to struggle through the rest of the year, said Mark Zandi, chief economist at Moody’s

“The coast is not clear,” Zandi told CNBC Friday. “I think it’s very unlikely that we will not get to over 10 percent this year, and that means policymakers can’t stand still. The Federal Reserve has to do more, and so does the President.”

President Obama greeted the August jobs report as positive news for the economy. Speaking at a press conference the White House Friday morning, Obama pointed to eight consecutive months of private sector jobs growth, saying it reflects the steps taken by the administration to “break the back of the recession.”

But Obama also warned that there is “no quick fix for the worst recession since the Great Depression.”

“I want all Americans to remind themselves that there are better times ahead, even after this economic crisis,” he said. “We remain the global leader in innovation, discovery and entrepreneurship.”

Obama also said he would address the current employment situation with a package of new measures to boost U.S. growth and hiring.

He also once again prodded the Senate to pass a bill that calls for about $12 billion in tax breaks for small businesses, as well as the creation of a $30 billion fund to help unfreeze lending. Republicans have likened the bill to the unpopular bailout of the financial industry.

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“I will be addressing a broader package of ideas next week,” he told reporters. “We are confident that we are moving in the right direction. But we want to keep this recovery moving stronger and accelerate the job growth that is needed so desperately all across the country.”

On Monday Obama pointed toward a number of possible options when he spoke about extending middle class tax cuts, investing in clean energy, spending more on infrastructure, and delivering more tax cuts to businesses to encourage hiring.

Life Inc.: Government cuts weigh on job market

The unemployment rate cannot drop until employers significantly ramp up hiring. Employers are slow to add new workers because of uncertainty over potential costs tied to recently passed health care and financial regulation reform as well as looming tax hikes.

Friday’s jobs report offered some glimmers of hope for the economy.

Both June and July's hiring figures were revised to show the private sector created more jobs in both months. The July figures were revised upward to 107,000 from 71,000. June was revised upward to 61,000 from 31,000. The revisions reflected smaller losses in construction, temporary help services and non-census government jobs.

Story: Strength in temporary jobs a welcome sign

Still, hiring has now been weak for four straight months. That deprives consumers of cash and reduces their ability to spend. That is one of the main reasons economic growth is likely to be so weak for the rest of this year.

“Ultimately, businesses will hire if they feel confident there will be revenue growth in the future,” said Julie Coronado, an economist at BNP Paribas. “But we’re growing at a pretty slow pace.”

The economy lost nearly 8.4 million jobs in 2008 and 2009. This year, private employers have added back 763,000 jobs. But the unemployment rate has barely moved, ticking down from 9.7 percent in January to 9.6 percent last month.

Including those who have given up looking for work and those who are working part time but would prefer full-time work, the so-called “underemployment” rate rose to 16.7 percent from 16.5 percent.

A jobless rate nearing 10 percent will ratchet up pressure on the Obama administration, Congress and the Federal Reserve to do more to jump start the economy. Tax cuts enacted in 2001 and 2003 are set to expire by the end of this year and many rank-and-file Democrats in Congress are joining Republicans in calling for all the cuts to be extended. President Barack Obama wants to let some tax cuts on upper income earners end.

Fed Chairman Ben Bernanke, meanwhile, said last week the central bank will take more steps to stimulate the economy if necessary. But he also said the foundations have been laid for economic growth to accelerate next year.

The Associated Press and Reuters contributed to this report.

Video: Obama speaks on jobs, economy

  1. Closed captioning of: Obama speaks on jobs, economy

    >>> taking a watch of the rose garden at the white house . new economic numbers out this morning, president with his economic team just getting out of a meeting. let's listen to the president.

    >> good morning, everybody. as we head into labor day weekend , i know many people across this country are concerned about what the future holds for themselves, for their families and for the economy, as a whole. as i've said from the start, there's no quick fix to the worst recession we have experienced since the great depression. it will take years more than any of us like to repair the damage. millions of our neighbors are living with that painfully every day. but i want all americans to remind themselves there are better days ahead, even after this economic crisis , our markets repaint most dynamic in the world. to our workers are still the most productive. we remain the global leader in innovation, in discovery, in entrepreneurship. now, the month i took office, we were losing 750,000 jobs a month. this morning, new figures show the economy produced 67,000 private-sector jobs in august, the eighth consecutive month of job growth . additionally, the numbers for july were revised upward to 107,000. it reflects the steps i have already taken to break the back of this recession. that's why we need to take further steps to create jobs and keep the economy growing, including extending tax cuts for the middle class and investing in the areas of the economy where the potential for job growth is greatest. in the weeks ahead, i will be discussing some of these ideas in more detail but one thing we also have to do right now, one thing we have a responsibility to do right now is to lift up our small businesses , which accounted for over 60% of job losses in the final months of last year. that's why, once again, i'm calling on congress to make passing a small business jobs bill its first order of business when it gets back into session later this month. now, here's why this is so important. up until this past may, we were not only waiving fees for entrepreneurs who took out small business administration loans, we were also encouraging more community banks to make loans to responsible business owners. now these steps are part of the reason about 70,000 new small business administration loans have been approved since i took office. and i thank karen mills for the outstanding job she has been doing as administrator of the small business administration . we have also been extending -- fighting to extend these loan enhancements with a small business jobs bill it is a bill that will more than double the amount some small business owners can can borrow to grow their companies. it will completely eliminate capital gains taxes on key investments so small business owners can buy new equipment and expand and will accelerate $55 billion in tax cuts for business, large and small, that make job creating investments in the next 14 months. and creep keep in mind, it is paid for it will not add one dime to our def of sit. so put simply this piece of legislation is good for workers. it's good for small business people. it's good for our economy. and yet, republicans in the senate have blocked this bill, a needless delay that has led small business owners across this country to put off hiring, put off expanding and put off plans that will make our economy stronger. i have repeated since i ran for office, there is no silver bullet that is going to solve all of our economic problems overnight but there are certain steps that we know will make a meaningful difference for small businessmen and women who are the primary drivers of job creation . there's certain measure has we know will advance our recovery. this small business jobs bill is one of them and i'm confident if we are willing to put partisanship aside and be the leaders the american people need us to be, if we are willing to do what's next -- not what's best for the next election but for the next generation, then we are not only going to see america 's hard- working families and america 's small businesses bounce back, but will rebuild america 's economy stronger than it's been before, okay? thank you very much.

    >> [ inaudible ].

    >> well, i will be addressing a broader package of ideas next week. we are confident that we are moving in the right direction, but we want to keep this recovery moving stronger and accelerate the job growth that's needed so desperately all across the country.

    >> what about a poverty agenda --

    >> decision to call this recovery [ inaudible ].

    >> i don't regret the notion that we are moving forward but because of the steps we have taken. and i'm going to have a press conference next week where after you guys are able to hear where we're at, we will be able to answer some specific questions but the key point i'm making right now is that the economy is moving inositive direction. jobs are being created, just not being created as fast as they need to given the big hole we experienced and we will continue to have to work with republicans and democrats to come one ideas that can further accelerate that job growth . i'm confident that we can do that. the evidence we have seen during the course of this summer and the course of the last 18 months indicate that we are moving in the right direction. we just have to speed it up? all right? thank you very much.

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