US jobs outlook improves as campaign heats up

(AP) The jobs outlook in the U.S. brightened a bit Thursday just before President Barack Obama was to make his case for re-election to the American people.

Fewer people applied for unemployment benefits last week, the government reported. And companies boosted hiring in August, according to a private survey.

A far more consequential report politically the government's unemployment and hiring figures for August will come out Friday, just as the presidential race enters its stretch run. Jobs are the core issue in the race, and that report could sway some undecided voters.

There will be two additional employment reports before Election Day. But by then, more Americans will have made up their minds.

"It's the most important economic data point we have between now and Election Day," said Tony Fratto, a White House spokesman under President George W. Bush.

Friday's jobs data is unlikely to signal significant improvement in the still-sluggish economy.

Economists' consensus forecast is that employers added 135,000 jobs last month, according to a survey by FactSet. That's below July's gain of 163,000. And it's probably not enough to bring down the unemployment rate, which is forecast to remain at 8.3 percent.

That would let Republican nominee Mitt Romney point to 43 straight months in which unemployment has exceeded 8 percent.

At the same time, Friday's report will almost surely mark a 30th straight month of private-sector job gains, a point Obama and his allies are certain to spotlight.

"The president's supporters will say, 'See, it's improving,' and the supporters of Gov. Romney will say, 'See, it's not improving fast enough,'" said Robert Shapiro, an economist and former trade official under President Bill Clinton.

The biggest threat to Obama would be a rise in the unemployment rate, the most visible economic statistic for most voters. The rate declined slightly in the spring but is now back where it was in January.

For the White House, higher unemployment would offset any political benefit from slow but consistent job creation. Voters are likely to ask, "If you're creating jobs every month, why is the rate going in the wrong way?" Fratto said.

A drop in unemployment would enable Obama to focus on social issues that might play better with the independent voters he needs in battleground states. Polls show Obama has an edge on Romney on social issues, while Romney has a slight advantage on the economy.

"It makes it easier for the president to continue attacks on women's health care, immigration and every other differentiation with Republicans," said Hank Sheinkopf, a Democratic strategist.

Obama is likely to have gotten an advance peek at Friday's job figures before his speech Thursday night at the Democratic National Convention. The report is normally sent to the White House the day before its release.

Thursday's government data on the job market exceeded economists' expectations. Weekly applications for unemployment benefits fell 12,000 last week to a seasonally adjusted 365,000. And ADP, a payroll provider, estimated that companies added 201,000 jobs last month, the most since March.

A third report found that service sector companies expanded at a faster pace last month. The Institute for Supply Management, a trade group of purchasing managers, said its services index rose to 53.7 from 52.6 in July. Any reading above 50 indicates expansion. Service businesses such as stores, hotels and financial companies reported sharp hiring gains.

Still, the ISM's report hasn't always closely matched the government's more authoritative employment report. And the ADP survey covers only private-sector hiring.

At least 200,000 jobs a month are needed to lower the unemployment rate. The economy has averaged only 150,000 new jobs a month since the start of 2011.

"Clearly, this is not an economy on track to the fast lane," said Chris Jones, an economist at TD Bank.

A weak employment report could nudge the Federal Reserve to announce some new action to boost growth after its meeting next week.

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Associated Press writer Josh Lederman contributed to this report.