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.
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Last Update on September 01, 2015 17:13 GMT
WASHINGTON (AP) -- U.S. construction spending in July climbed to its highest level in more than seven years, boosted by an increase in the building of houses, factories and power plants.
The Commerce Department says construction spending rose 0.7 percent to a seasonally adjusted annual rate of $1.08 trillion, the highest level since May 2008. The report also revised up the June increase in construction spending to 0.7 percent from 0.1 percent previously.
Ground breakings for houses, apartment complexes and commercial centers have helped to improve overall economic growth. The government said last week that the U.S. economy expanded at an annual rate of 3.7 percent in the April-June quarter, after having edged up just 0.6 percent in the first quarter.
Total construction spending has risen 13.7 percent over the past 12 months.
WASHINGTON (AP) -- A private survey finds that growth in US manufacturing slowed last month to the lowest pace in more than two years.
The Institute for Supply Management, a trade group for purchasing managers, reports that its manufacturing index slid to 51.1 last month from 52.7 in July. It was the second straight drop, and marked the weakest reading since May 2013. Anything above 50 signals growth. Economists had expected the index to rise last month.
Raw materials prices fell for the 10th straight month. Growth fell in production, employment and exports.
The strong dollar has made U.S. goods more expensive in foreign markets. China's economic slowdown has also pinched manufacturers and pushed commodities prices lower.
DETROIT (AP) -- Fiat Chrysler's U.S. sales rose 2 percent in August thanks to strong demand for Jeep SUVs.
Jeep brand sales were up 18 percent, making up for double-digit declines for the Chrysler and Dodge brands. Fiat Chrysler sold 201,672 vehicles overall.
Industry sales were expected to drop 3 percent from last August, according to car buying site TrueCar.com. It was the first year-over-year monthly sales decline since January 2014. But industry analysts say a quirk in the calendar -- not a lack of demand -- was to blame.
Labor Day is typically one of the biggest sales weekends of the year as dealers hold model year-end clearance sales. Last year, Labor Day weekend was counted as part of August sales. This year it's in September.
WASHINGTON (AP) -- A federal panel says airlines should clearly disclose the cost of change and cancellation fees, as well as the size of the plane's seats, before a passenger buys a ticket.
The Advisory Committee For Aviation Consumer Protections also is recommending that hotels be required to include any mandatory resort or other fees in their room rates.
Some hotels have begun adding mandatory fees to bills even though customers say they weren't informed of them when they booked their rooms.
Likewise, the panel heard testimony that passengers must search to find the cost of change or cancellation fees that airlines hide in a ticket's fine print. The fees can run hundreds of dollars.
Airlines have also shrunk the distance between seats as much as six inches in recent years.
JAKARTA, Indonesia (AP) -- The head of the International Monetary Fund says global economic growth is likely to be weaker than earlier expected and will remain at moderate levels.
IMF Managing Director Christine Lagarde said Asia is still expected to lead global growth, but the pace is slowing with a risk of possibly sagging further because of recent financial market volatility.
Speaking today in a lecture at the University of Indonesia, Lagarde said the global economic situation will have a significant impact on developing countries, including Indonesia.
Lagarde, who is on a two-day visit to Indonesia, met today with Indonesia's president and discussed the global economic situation.
Indonesian officials and the IMF's senior resident representative are denying speculation that Indonesia is seeking loans from the IMF.
BERLIN (AP) -- Germany's labor minister says the country's economy has room to accommodate refugees, but the government will need to spend billions of extra euros (dollars) to cover language courses, benefits and their integration into the labor market.
Labor Minister Andrea Nahles' comments come after official data underlined the strength of Europe's biggest economy, showing the national unemployment rate at 6.4 percent in August. That compares with higher jobless rates in many other European countries, topping 20 percent in Greece and Spain.
Nahles says, "Additional workers are needed in many areas of the German economy." She says, "We want to use this situation to open up the opportunity for the refugees who have come to us legitimately of a new and better life in Germany."
LISBON, Portugal (AP) -- Portugal is having trouble selling Novo Banco, the so-called good bank salvaged from last year's collapse of major lender Banco Espirito Santo.
The Bank of Portugal said Tuesday it had missed its own Aug. 31 deadline for the sale after failing to reach agreement with a potential buyer, which it didn't identify.
The central bank said in a statement it was starting talks with another bidder, also unnamed. It said a third bid remains on the table.
Novo Banco received 4.9 billion euros ($5.5 billion) from a so-called bank resolution fund, a mechanism adopted during the eurozone debt crisis to support the financial sector.
The Portuguese Treasury provided 3.9 billion euros of that, with other Portuguese banks providing the rest, and those lenders want to recoup their money.
CHESAPEAKE, Va. (AP) -- Dollar Tree Inc. (DLTR) is reporting a fiscal second-quarter loss of $98 million, after reporting a profit in the same period a year earlier.
On a per-share basis, the Chesapeake, Virginia-based company says it loss of 46 cents. Earnings, adjusted for costs related to mergers and acquisitions, were 25 cents per share.
SUBWAY SPOKESMAN-FOUNDATION CHIEF
INDIANAPOLIS (AP) -- An attorney says the former director of a foundation created by ex-Subway spokesman Jared Fogle will plead guilty to child pornography charges.
Russell Taylor was charged in May with seven counts of production of child pornography and one count of possession of child pornography.
His attorney, Brad Banks, tells Fox59 in Indianapolis that they "anticipate the filing of a guilty plea in the near future."
Taylor led the Jared Foundation, which raises awareness and money to fight childhood obesity. Taylor is in federal custody.
Fogle is also expected to plead guilty at a hearing in November. He faces federal charges of distribution and receipt of child pornography and traveling to engage in illicit sexual conduct with a minor. He's has been released on home detention.
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