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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 August 28, 2014 17:08 GMT
WASHINGTON (AP) -- After a bleak start to the year, the U.S. economy rebounded vigorously in the April-June quarter, growing at a brisk annual rate of 4.2 percent, slightly faster than first estimated.
The upward revision supported expectations that the second half of 2014 will prove far stronger than the first half.
The Commerce Department's second estimate of growth for last quarter compares with its initial estimate of 4 percent. The revision reflected stronger business investment in new equipment and structures than first thought.
The seasonally adjusted 4.2 percent annual growth rate for the gross domestic product came after the economy had shrink at an annual rate of 2.1 percent in the January-March quarter, the biggest drop in activity since the depths of the Great Recession.
WASHINGTON (AP) -- The number of Americans applying for unemployment benefits slipped 1,000 last week to a seasonally adjusted 298,000, a low level that signals employers are cutting few jobs and hiring is likely to remain strong.
The Labor Department says the four-week average, a less volatile measure, dropped to 299,750. That's just 6,000 higher than four weeks ago, when the average fell to the lowest level in more than eight years.
When employers hold onto their workers, it suggests they are more confident in the economy and could step up hiring.
The applications data is the latest sign that the job market is steadily healing. Average job gains since February have been the best in eight years.
PENDING HOME SALES
WASHINGTON (AP) -- More Americans signed contracts to buy homes in July, a sign that buying has improved as mortgage rates have slipped, the number of listings has risen and the rate of price increases has slowed.
The National Association of Realtors says its seasonally adjusted pending home sales index rose 3.3 percent to 105.9 last month. Still, the index remains 2.1 percent below its level a year ago.
The pressures that caused home sales to stall last year have started to ease. The average 30-year fixed mortgage rate has dropped to 4.1 percent, a 52-week low. Prices are no longer rising at double-digit annual rates, thereby helping to improve affordability.
Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.
WASHINGTON (AP) -- The average 30-year U.S. mortgage rate remains at a 52-week low this week.
Mortgage company Freddie Mac says the nationwide average for a 30-year mortgage is 4.10 percent, the same as last week. The average for a 15-year mortgage, a popular choice for people who are refinancing, has risen to 3.25 percent from 3.23 percent.
At its 52-week low of 4.10 percent, the rate on a 30-year mortgage is down from 4.53 percent at the start of the year. Rates have fallen even though the Federal Reserve has been trimming its monthly bond purchases, which are intended to keep long-term borrowing rates low. The purchases are set to end in October.
The low rates appear to have boosted U.S. home sales.
WASHINGTON (AP) -- U.S. banks' earnings rose 5.2 percent in the April-June quarter from a year earlier, as banks reduced their expenses and lending marked its fastest pace since 2007.
The data issued Wednesday by the Federal Deposit Insurance Corp. showed a robust picture as the banking industry continues to recover from the financial crisis that struck six years ago. The improving economy has brought greater demand for loans and stepped-up lending.
The FDIC reported that U.S. banks earned $40.2 billion in the second quarter of this year, up from $38.2 billion in the same period in 2013.
The number of banks on the FDIC's problem list fell to 354 in the second quarter, the lowest number in more than five years and down from 411 in the January-March period.
KAMPALA, Uganda (AP) -- The World Health Organization is urging airlines to lift most of their restrictions for flying to Ebola-hit nations because a predictable "air link" is needed to help deal with the crisis.
The WHO's assistant director-general for emergency operations, Dr. Bruce Aylward, says "there is a super risk of the response effort being choked off" if airlines restrict flights to Liberia, Sierra Leone and Guinea.
TEWKSBURY, Mass. (AP) -- Workers at the New England supermarket chain Market Basket are cheering the return of former CEO Arthur T. Demoulas (deh-MOO'-lahs), following a feud with his cousin that saw him fired.
Demoulas announced Wednesday that an agreement has been reached for him to buy majority stake in the business -- $1.5 billion the 50.5 percent of the company owned by his rival cousin Arthur S. Demoulas and his allies. The deal is expected to take several months.
There was uproar after Arthur T. Demoulas' firing weeks ago, with workers revolting and customers boycotting the business.
In a speech at company headquarters today in Massachusetts, Demoulas told workers, that he's "in awe of what you have all accomplished."
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