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 29, 2015 07:23 GMT
WASHINGTON (AP) -- The National Association of Realtors releases its pending home sales index this morning and Federal Reserve policymakers convene for their second and final day of a meeting to set interest rates. The Fed is expected to release a statement in the early afternoon.
Quarterly earnings reports continue, with Anthem, MasterCard and Goodyear announcing results before the market opens. Facebook and Whole Foods will report quarterly financial results after market close.
WASHINGTON (AP) -- The Federal Reserve is moving toward raising interest rates from record lows -- just not likely yet.
When it ends its latest policy meeting today, Fed officials will issue a statement that will be parsed for clues to just when the first rate increase since 2006 might occur. But no news conference with Chairwoman Janet Yellen is scheduled.
Many economists foresee the first hike coming in September, but they don't expect this week's policy statement to clearly signal the timing. Yellen has stressed that the decision will be driven by the latest economic data.
Yellen has left little doubt that the Fed is preparing to raise short-term rates by year's end from the near-zero lows it set during the 2008 financial crisis. With the U.S. economy and job market now steadily rising, the need for ultra-low rates to stimulate growth is fading.
The economy still faces an array of threats, from subpar U.S. manufacturing and business investment to troubles in Europe and Asia.
Yellen has stressed that when the Fed begins to raise rates, it will do so gradually.
WASHINGTON (AP) -- The House is scheduled to vote today on a three-month highway spending bill. The measure includes nearly $3.4 billion to fill a budget hole for the Department of Veterans Affairs. The department claims that without the boost, it will have to close hospitals and clinics nationwide.
The money would come from the new Veterans Choice program that pays for private health care for veterans. The VA could use up to $500 million from the Choice program to cover costs of treating the deadly hepatitis C virus.
The VA has told Congress that it may close hospitals unless it receives flexibility to make up a $2.5 billion shortfall from a sharp increase in demand for health care. That includes expensive treatments for hepatitis C. A single pill used for the liver-wasting infection can cost $1,000.
The Choice program makes it easier for veterans to receive federally paid medical care from local doctors. Congress approved $10 billion over three years for the Choice program. It's one of several programs the VA uses to provide medical care for an estimated 9 million veterans enrolled in its health care system.
EXPORT-IMPORT BANK-5 THINGS
WASHINGTON (AP) -- The Export-Import Bank will stay shuttered at least into the fall, when Congress returns from its annual August recess. The House did not include the bank in its highway bill.
The bank's charter expired at the end of June, but it continues to service more than $100 billion in outstanding loans and guarantees. The agency itself is funded through Sept. 30.
Supporters of the bank include the U.S. Chamber of Commerce and the National Association of Manufacturers. They say it will be harder for U.S. companies to compete overseas if their competitors are supported by their governments and they aren't.
Opponents, however, argue the bank mostly helps big businesses. Among those who want to see the bank permanently shuttered include tea-party conservatives in the House, the Club for Growth, Heritage Action for America and the Koch brothers.
SAN JUAN, Puerto Rico (AP) -- U.S. Treasury Secretary Jacob Lew said yesterday that creating a path as soon as possible to allow Puerto Rico's government to file for bankruptcy would help the U.S. territory recover from its economic crisis.
Lew also stressed that no federal bailout is planned for Puerto Rico despite concerns its government might default on several upcoming payments as it struggles with $72 billion of public debt.
In a letter to the Senate Finance Committee chairman, Lew said Puerto Rico's fiscal situation is urgent and requires the immediate attention of Congress.
Lew said the federal government has a critical role to play in Puerto Rico's situation, including "a tested legal bankruptcy regime that enables Puerto Rico to manage its financial challenges in an orderly way."
Leading House Republicans have said they worry that allowing such access would not solve Puerto Rico's financial difficulties.
NEW YORK (AP) -- Twitter failed to add users at a quick enough pace for investors in the second quarter even as revenue grew sharply, feeding concerns about whether it can ever become a mass-market service like Facebook or Google.
The beleaguered company is searching for a permanent CEO to replace Dick Costolo, who stepped down at the beginning of this month. Co-founder and chairman Jack Dorsey is serving as interim CEO.
Dorsey said yesterday that while the results show "good progress in monetization," the company is "not satisfied" with the growth of its audience.
On average, Twitter had 316 million monthly active users in the second quarter, up 15 percent year-over-year but up less than 3 percent from the first quarter of this year.
Twitter's finance chief, Anthony Noto, said in a conference call that the company doesn't expect to see "sustained, meaningful growth" of its user base until it reaches the mass market. He did not say when that would be, only that it would take a considerable amount of time.
SAVING GREEN CHILE
ALBUQUERQUE, N.M. (AP) -- Green chiles, the signature crop of New Mexico, are in danger.
As this year's harvest begins, labor shortages, drought and foreign competition have hurt production in the state.
Farmers and producers say shrinking acreage set aside for the crop also highlights the need for changes in the industry that has helped define New Mexico for generations.
To rejuvenate production, investors and inventors are testing machines that would harvest and de-stem the crop.
The delicate chiles are now picked by hand, and problems with bruising and the removal of stems have made it difficult to make the change to machines.
Ed Ogaz, owner of chile wholesaler Seco Spice Co., prefers the old ways and believes farmers need more laborers to improve production.
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