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US Employers Add 175K Jobs, Rate Up to 7.6 Percent
WASHINGTON (AP) — The U.S. economy is adding jobs at a steady pace — enough to show strength in the face of tax increases and government spending cuts if not enough to reduce still-high unemployment.
Employers added 175,000 jobs in May, and the unemployment rate rose to 7.6 percent from 7.5 percent in April, the Labor Department said Friday. The rate rose because more people began looking for work, a healthy sign. About three-quarters found jobs.
The government revised the job figures for the previous two months. April’s gain was lowered to 149,000 from 165,000. March’s was increased slightly to 142,000 from 138,000. The net loss was 12,000 jobs.
Investors appeared pleased by the evidence that job growth remains steady. The Dow Jones industrial average was up nearly 200 points in late-morning trading.
Friday’s job figures provided further evidence of the U.S. economy’s resilience. The housing market is strengthening, auto sales are up and consumer confidence has reached a five-year peak. Stock prices are near record highs, and the budget deficit has shrunk.
The U.S. economy’s relative strength contrasts with Europe, which is gripped by recession, and Asia, where once-explosive economies are now struggling.
Many analysts expect the U.S. economy to strengthen later this year.
‘‘Today’s report has to be encouraging for growth in the second half of the year,’’ said Dan Greenhaus, an analyst at BTIG LLC.
It also eased worries that had arisen after economic reports earlier this week had suggested that the economy might be weakening.
Employers have added an average of 155,000 jobs the past three months. But the May gain almost exactly matched the average increase of the previous 12 months: 172,000.
Analysts said the less-than-robust job growth would likely lead the Federal Reserve to maintain the pace of its monthly bond purchases for at least a few more months. The Fed has said it will keep buying bonds at the same rate until the job market improves substantially. The bond purchases have helped drive down interest rates and boost stock prices.
Stock markets have gyrated in the past two weeks on speculation that the Fed would soon start to taper its $85 billion-a-month in bond buying — a step that could raise rates and cause stock prices to fall.
‘‘I think the Fed will stay on hold,’’ said Nariman Behravesh, chief economist at IHS Global Insight. ‘‘They want to see numbers above 200,000 on payroll jobs on a consistent basis before they start to taper off.’’
Behravesh said he thinks the Fed will maintain its pace of bond buying through this year before scaling it back in 2014.
‘‘Today’s report is perhaps the perfect number for nervous investors,’’ said James Marple, Senior Economist at TD Economics. ‘‘It is strong enough to point to continued economic recovery but not so strong as to bring forward expectations of Fed tapering.’’
Other analysts who have predicted that the Fed would start trimming its bond purchases later this year said they didn’t think Friday’s jobs report would change that timetable.
John Canally, an economist at LPL Financial, blames the Federal Reserve for not specifying how much monthly job growth it wants to see before it scales back its bond buying.
‘‘They have not been transparent enough,’’ Canally said. ‘‘That is what has unhinged markets.’’
Some signs in the report suggested that the spending cuts and weaker global growth are weighing on the job market. Manufacturers cut 8,000 jobs, and the federal government shed 14,000. Both were the third straight month of cuts for those industries.
The number of temporary jobs rose about 26,000, the second straight month of strong gains. That suggests that employers are responding to more demand but aren’t confident enough to hire permanent workers. Many temporary employees work in manufacturing, which cut permanent jobs.
But industries that rely directly on consumer spending hired at a healthy pace — a sign of confidence that consumers will keep spending. Retailers added 28,000 jobs. Restaurants and hotels added 33,000.
Average hourly wages ticked up just a penny in May, to $23.89. That was because much of the job growth was in lower-paying industries.
But mild inflation is boosting American’s purchasing power. Over the past 12 months, hourly wages have risen 2 percent. Inflation has increased just 1.1 percent in that time.
The economy grew at a solid annual rate of 2.4 percent in the first three months of the year. Consumer spending rose at the fastest pace in more than two years. But economists worry that the steep government spending cuts and higher Social Security taxes might be slowing growth in the April-June quarter to an annual rate of 2 percent or less.
Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
More Business News
Last Update on July 25, 2014 17:51 GMT
WASHINGTON (AP) -- Orders for long-lasting manufactured goods rebounded in June after a May decline, helped by a recovery in demand in a key category that signals business investment plans.
The Commerce Department says that orders for durable goods increased 0.7 percent in June on a seasonally adjusted basis following a 1 percent decline in May.
A category viewed as a proxy for business investment plans rose a solid 1.4 percent, recovering after a revised 1.2 percent drop in May. It was the best showing since orders in this core capital goods category rose 4.7 percent in March.
The strength last month came from solid gains in demand for commercial aircraft and machinery. Economists expect economic activity will strengthen in the second half of the year, helped by stronger factory production.
DETROIT (AP) -- U.S. safety regulators are investigating whether an electrical problem can knock out the air bags on some older Hyundai Sonatas.
The probe announced Friday covers about 394,000 midsize cars from the 2006 through 2008 model years.
The National Highway Traffic Safety Administration says it has received 83 complaints about the problem. The agency says a sensor inside the seat belt buckle might fail. This can cause the air bags to malfunction or not inflate if there's a crash.
The problem also can affect the mechanism that tightens the seat belts before a crash. The problem can happen in either the driver or passenger buckles. In most cases the air bag warning light came on.
Investigations can lead to recalls but none has been issued so far in this case.
CHILD TAX CREDIT
WASHINGTON (AP) -- The House has passed a bill that would gradually increase the child tax credit and make it available to more families with higher incomes.
But millions of low-income families would lose the $1,000-a-child credit in 2018, when enhancements championed by President Barack Obama are set to expire.
The bill also aims to make a dent in illegal immigration by prohibiting people without Social Security numbers from claiming a portion of the credit reserved for low-income families.
The White House has threatened to veto the bill, saying it favors high-income taxpayers over the poor, while adding $90 billion to the budget deficit over the next decade.
House Republicans say the bill strengthens the tax credit by increasing it as inflation rises, and by making it available to more middle-income families.
LONDON (AP) -- Official figures show Britain's economy has surpassed its pre-recession size for the first time since the 2008 global banking crisis.
The Office for National Statistics says gross domestic product grew by 0.8 percent in the three months through June compared with the previous quarter. It grew 3.1 percent over the year, putting it 0.2 percent ahead of its pre-crisis peak in early 2008.
The global financial crisis triggered a deep downturn for the British economy. By mid-2009, GDP was more than 7 percent below its pre-recession level.
Treasury chief George Osborne said Friday's figures marked a "major milestone in our long-term economic plan."
Government critics say the recovery is not built on solid foundations and point out that per-capita GDP remains about 6 percent lower than before the crisis.
BERLIN (AP) -- German business confidence is down for a third month in a row amid ongoing concerns about the economic impact of the crises in Ukraine and Iraq.
The closely-watched Ifo Institute survey fell to 108 points in July from 109.7 points in June. Economists had widely been expecting a slight rise over June's figure.
The institute said Friday that businesses' assessment of their current situation fell to 112.9 points from 114.8 the previous month, while their expectations for the future fell to 103.4 from 104.8.
The Ifo survey is based on monthly responses from about 7,000 companies.
MOSCOW (AP) -- Russia's central bank has unexpectedly raised its key interest rate in a bid to stem inflation and support the currency as the country faces increasing economic pressure over its policies in Ukraine.
The bank said Friday it has lifted its one-week auction rate by 0.5 percentage points to 8 percent. The central bank cited "heightened geopolitical risks" that are likely to push down the Russian ruble, fueling consumer price inflation. Higher rates tend to support a currency but can hurt economic growth.
The rate has risen from 5.5 at the beginning of the year. That has helped support the ruble after a period of weakness, but growth is sliding.
The United States last week imposed tougher sanctions on Russia over its alleged unwillingness to help end the conflict in Ukraine.
BERLIN (AP) -- Germany's biggest airline, Lufthansa, says it and subsidiaries in other European countries will resume flights to Tel Aviv on Saturday after canceling operations for several days over safety concerns.
Lufthansa said Friday that it made the decision "on the basis of the most up-to-date information we have available and our own assessment of the local security situation."
It says flights will resume in stages starting Saturday morning. The decision also applies to subsidiaries Germanwings, Austrian Airlines, Swiss and Brussels Airlines.
The European Aviation Safety Agency on Thursday lifted a recommendation that airlines refrain from flying to Israel's main airport, which it made because of security concerns after a Hamas missile landed nearby this week. However, Lufthansa canceled flights scheduled for Friday.
AIR CANADA- ISRAEL FLIGHT
TORONTO (AP) -- An Air Canada flight had to circle Tel Aviv's airport for 10 minutes after air traffic control said the conditions needed to be confirmed as safe for landing.
Airline spokeswoman Isabelle Arthur said Friday Flight AC84 was advised to circle by Israeli Air Traffic Control shortly before 12 p.m. local time. She says the plane altered its course about 5 miles from Ben Gurion airport and landed 10 minutes later without incident. She did not say why.
Arthur says the return flight to Toronto departed Tel Aviv about two hours later. The airline plans to operate this evening's flight to Tel Aviv.
Flights by Air Canada and other airlines to Tel Aviv resumed Thursday after a suspension Tuesday following a Hamas rocket strike nearby.
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