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 March 02, 2015 18:30 GMT
WASHINGTON (AP) -- Consumer spending fell for a second consecutive month in January, weakness that was expected to be temporary. Income grew, reflecting strong job gains during the month.
The Commerce Department says consumer spending fell 0.2 percent in January following a 0.3 percent drop in December. Economists had expected a dip, reflecting a big drop in gas prices during the month. That decline should prove to be a positive for the economy going forward, giving consumers more money to spend on other goods.
Income grew 0.3 percent in January as wages and salaries increased a strong $42.4 billion. Analysts expect that solid job gains and low unemployment will bolster consumer spending and lift economic growth this year to what they predict will be the fastest pace in a decade.
WASHINGTON (AP) -- U.S. factories expanded last month at the weakest pace in a year, with orders, hiring and production all growing more slowly.
The Institute for Supply Management, a trade group of purchasing managers, says its manufacturing index slipped to 52.9 in February from 53.5 in January. It was the fourth straight drop and the lowest reading since January 2014. Still, any reading above 50 signals expansion.
Measures of production and employment fell sharply, though they remained in expansionary territory. That suggests that factories are still adding jobs but at a slower pace than in January.
U.S. manufacturers have been held back in recent months by weak growth in China, Europe and Japan. That's been partly offset by strong consumer demand in the United States.
WASHINGTON (AP) -- U.S. construction spending fell in January, reflecting weakness in spending on office buildings and other nonresidential projects and in government activity.
The Commerce Department says construction spending fell 1.1 percent in January following a revised 0.8 percent increase in December.
Spending on home construction rose 0.6 percent but spending on nonresidential projects dropped 1.6 percent, reflecting declines in hotels, office buildings and the category that covers shopping centers. Spending on government projects also declined in January, falling 2.8 percent.
Private economists had predicted a small overall gain in January.
HP'S BIG ACQUISITION
SAN FRANCISCO (AP) -- Hewlett-Packard is buying wireless networking company Aruba Networks for about $2.7 billion, the biggest acquisition by HP in recent years.
Palo Alto, Calif.-based HP said the deal will boost its commercial technology business as it prepares to split into two companies, one focused on selling commercial computer systems and the other selling personal computers and printers.
Aruba, based in Sunnyvale, Calif., makes wi-fi networking systems for shopping malls, corporate campuses, hotels and universities.
HP is paying $24.67 in cash for each Aruba share. That is slightly below its close of $24.81 on Friday.
The deal announced Monday is HP's biggest since CEO Meg Whitman launched a turnaround effort aimed at reorganizing in the face of declining revenue.
MADRID (AP) -- Spain's economy minister says eurozone nations are negotiating a third bailout for financially strapped Greece that would give the country as much as 50 billion euros ($56 billion).
Luis de Guindos also says that "Greece will not leave the eurozone" because that would not be good for the country or the other 18 countries that also use the common euro currency.
De Guindos says that the bailout would provide between 30 billion euros and 50 billion euros.
He spoke Monday at an economic conference in the city of Pamplona and his comments were sent via email to media outlets.
De Guindos says "the central scenario for Greece is a deal on the basis of the current bailout, and new conditions to be set with flexibility."
MORGAN STANLEY-NY LAWSUIT
NEW YORK (AP) -- Morgan Stanley, which agreed to a $2.6 billion settlement with the federal government last week, says it expects to be sued by New York Attorney General Eric Schneiderman over subprime mortgage bonds.
The bank says it was told about the lawsuit in January and that it will involve about 30 subprime securities. Morgan Stanley say the lawsuit will say that it misrepresented or omitted important information related to loans and the properties securing them.
On Wednesday Morgan Stanley said it would pay $2.6 billion to settle with the federal government over its role in the mortgage bubble and subsequent financial crisis. Wall Street banks have paid tens of billions in similar settlements over the last two years, and Morgan Stanley has reached smaller settlements with federal and state agencies.
BRUSSELS (AP) -- The European Union is giving member states the power to ban the cultivation of genetically-modified crops even if they have been approved by the bloc's food safety authority.
The 28 EU member states on Monday approved the rule that national governments can have the final say in the matter -- a move that goes counter to many EU initiatives, which traditionally seek a common stance on EU policies.
Mute Schimpf of Friends of the Earth Europe says the new law "is a massive opportunity for national governments to shut the door on biotech crops in Europe."
Only one GM crop -- corn -- is planted in the EU so far, predominantly in Spain. Under the rules, governments would still have to consult biotech companies when banning a crop.
PARIS (AP) -- France is ordering manufacturers to inform consumers how long they can expect their TV, cell phone or other appliance to last -- before they buy it.
A new French government decree that came into effect this week aims at fighting so-called planned obsolescence. That is when companies design strategies to limit the life span of appliances, so that consumers will have to replace them.
The measure requires manufacturers to inform vendors how long spare parts for an appliance will continue to be produced. The vendor is then required to inform the buyer, in writing. Violators face up to 15,000 euros ($16,800) in fines.
A similar French measure coming into effect next year will require manufacturers to replace or repair faulty appliances for free for the first two years after purchase.
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