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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 April 16, 2014 07:33 GMT
TOKYO (AP) -- Shares rose today in Asia, led by Japan's Nikkei 225 index, as investors largely shrugged off news that China's economy slowed in the first quarter.
The Nikkei jumped 2.7 percent as Softbank Corp. shares soared more than 8 percent after Chinese e-commerce Alibaba Group Holding Co., in which it holds a 37 percent state, reported strong earnings.
The dollar gained against the yen and slipped against the euro. Benchmark U.S. crude oil rose to near $104 a barrel.
WASHINGTON (AP) -- The Commerce Department leads off today's economic reports with March housing starts. Home construction has fallen for the previous three months, but February's report had a ray of hope as applications for building permits had risen a solid 7.7 percent. We'll see this morning whether that's starting to show up.
We'll also get some updates from the Federal Reserve. In the morning, the central bank releases data on industrial production for last month. Factory output showed a strong rebound in February after winter storm led to a steep drop in January.
This afternoon, the Fed releases its Beige Book, a survey of regional of business conditions.
Another big bank leads off today's corporate earnings reports. Bank of America reports quarterly financial results before the market opens.
After today's close, we get numbers from American Express, Capital One, Google and IBM.
DETROIT (AP) -- General Motors plans to ask a federal bankruptcy judge to shield the company from legal claims for conduct that occurred before its 2009 bankruptcy.
The automaker's strategy is in a motion filed late last night a Corpus Christi, Texas, federal court case, and in other cases across the nation that involve the defective ignition switches that have led GM to recall 2.6 million small cars.
The motion asks U.S. District Judge Nelva Gonzales Ramos to delay action on the lawsuit until the bankruptcy court rules and other federal courts decide if the case should be combined with other lawsuits. But GM says it's not asking to halt action on a motion to force GM to tell customers not to drive their cars that are being recalled.
GM has said at least 13 deaths have been linked to a switch that can unexpectedly slip out of the "run" position, shutting down the engine, knocking out power-assisted steering and power brakes, and disabling the air bags.
SAN FRANCISCO (AP) -- Yahoo's listless advertising sales are showing signs of life, but the company still saw a 20 percent drop in earnings in the first quarter.
The results highlight the contrasting performances of Yahoo's investment portfolio and the company's business of running ad-supported online services. Yahoo is making most of its money from its stakes in two Asian Internet companies -- China's Alibaba Group and Yahoo Japan.
Meanwhile, Yahoo's ad revenue remains stuck in a funk, although some segments showed modest improvement in the first quarter.
Yahoo earned $312 million, or 29 cents per share, during the first three months of this year. That compared to $390 million, or 35 cents per share, at the same time last year.
Revenue dipped 1 percent to $1.13 billion.
NEW YORK (AP) -- Intel says its first-quarter earnings declined, but revenue grew as it saw improvements in its PC business and solid demand for tablet processors.
Intel reports earnings of $1.95 billion, or 38 cents per share, in the January-March quarter. That's down from 40 cents per share in the first quarter of last year but still a penny better than analysts surveyed by FactSet had predicted.
Revenue grew 1 percent to $12.8 billion.
Intel has been challenged by a shift in consumer spending away from PCs. Although Intel is the leader in making chips for PCs, it hasn't done as well selling processors for smartphones and tablets. Intel has been working to change that.
OMAHA, Neb. (AP) -- CSX's first-quarter results show harsh winter weather slowed the railroad, contributing to a 14 percent drop in first-quarter profit despite modest growth in the volume of freight it carried.
CSX estimates the snow and cold cost it 8 to 9 cents per share in lost revenue and increased expenses.
CSX reports net income of $398 million, or 40 cents per share, in the quarter ending March 31. That's down 5 cents per share from a year ago, but a penny better than analysts had expected according to FactSet.
The railroad's revenue grew 2 percent to just over $3 billion as it hauled 3 percent more freight. Increases in intermodal and merchandise shipments offset coal weakness.
CSX says it expects modest profit growth this year.
WHITEHOUSE STATION, N.J. (AP) -- Merck & Co. says the Food and Drug Administration has approved its new tablet for grass allergies, Grastek, for patients five to 65 years old.
Meant as an alternative to weekly allergy shots, the tablet dissolves under the tongue. Taken daily for a few years, it gradually reduces sensitivity to common grasses, instead of temporarily relieving symptoms including sneezing, runny nose, and itchy, watery eyes. And it's best to start taking Grastek three months before grass pollen season begins.
The drug can cause severe allergic reactions and shouldn't be used by patients with severe asthma.
Merck will market the tablet in North America. Its partner, ALK-Abello, sells it in Europe as Grazas.
Merck says Grastek will be available in U.S. pharmacies in late April.
BOSTON (AP) -- A federal judge has blocked Massachusetts from banning the powerful new painkiller Zohydro.
The judge issued a preliminary injunction Tuesday after pharmaceutical company, Zogenix, argued in a lawsuit that the ban issued by Gov. Deval Patrick is unconstitutional. The judge says Massachusetts appears to have overstepped its authority in banning a federally approved medication.
The San Diego-based drugmaker is hailing the ruling.
Patrick says he's disappointed and the state will look for other ways to combat its drug abuse problem. The state argued Zohydro would exacerbate illegal drug use because it can be easily crushed, then snorted or injected to create an immediate and potentially lethal high.
The National Alliance for Model State Drug Laws says the Massachusetts ban is believed to be the first attempt by a state to block a federally approved drug.
DETROIT (AP) -- The Detroit pension fund that covers all retirees except former police officers and firefighters says it has reached a tentative agreement with the bankrupt city.
Tina Bassett, a spokeswoman for the city's general pension fund, says retirees would see a 4.5 percent cut and their cost-of-living payments would be eliminated under a deal reached late Tuesday.
Hours earlier, a group representing retired police and firefighters announced that it had reached its own deal to preserve pension benefits but trim cost-of-living payments.
Together, the agreements would cover all of Detroit's retired public workers. They would still need the approval of the more than 20,000 retirees and the thousands of active workers who qualify for a future pension. The bankruptcy judge would also have to approve.
SMARTPHONE KILL SWITCH-WIRELESS INDUSTRY
SAN FRANCISCO (AP) -- A trade group for wireless providers says the country's biggest smartphone makers and carriers will soon put anti-theft tools on the devices to try to deter rampant theft.
CTIA-The Wireless Association says that under a "Smartphone Anti-Theft Voluntary Commitment," the providers agree to install a free preloaded or downloadable anti-theft tool on smartphones sold in the U.S. after July 2015.
The wireless industry has said putting a permanent "kill switch" on phones has serious risks, including potential vulnerability to hackers.
San Francisco District Attorney George Gascon and New York Attorney General Eric Schneiderman have demanded that the wireless industry create kill switches. They say CTIA's plan still falls short of effectively ending smartphone theft because the measures will rely on consumers to seek out and turn on the technology.
BEIJING (AP) -- China's economic growth slowed to 7.4 percent in the first quarter, the slowest since the third quarter of 2012.
The figure reported Wednesday by the government is down from the previous quarter's 7.7 percent. It comes in below the full-year official growth target of 7.5 percent announced last month.
Beijing is trying to guide China to slower, more sustainable growth based on domestic consumption rather than trade and investment following a decade of explosive expansion.
The latest growth figures add to weaker-than-expected trade and other data that have raised the possibility of politically dangerous job losses.
Weaker growth also could hurt Asian economies and others for which China is a top market for commodities and industrial components.
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