Solid job gains ease fears
The U.S. economy showed in April that it’s healthier than many had feared, adding 165,000 jobs and driving the unemployment rate down a notch to a four-year low of 7.5 percent.
Not only that, but many more people were hired in February and March than previously thought, the Labor Department said Friday. The job gains came despite a global slowdown, Social Security tax increases and federal spending cuts, which some thought would drag on the economy.
The stock market soared on the news. The Dow Jones industrial average closed up 142 points, or nearly 1 percent, after briefly breaking 15,000 for the first time in history.
Coming after a poor March jobs report and some recent data showing economic weakness, the figures helped ease fears that U.S. hiring might be slumping for a fourth-straight year. The job market is benefiting from a resurgent housing market, rising consumer confidence and the Federal Reserve’s stimulus actions, which have helped lower borrowing costs and lift the stock market.
“All things considered, 165,000 isn’t the biggest monthly gain in payrolls you’ll ever see, but it’s enough to assuage concerns that the economy had stalled again,” said Paul Ashworth, an economist at Capital Economics.
The Labor Department revised upward its estimate of job gains in February and March by a combined 114,000. It now says employers added 332,000 jobs in February and 138,000 in March.
The economy has created an average of 208,000 jobs a month from November through April — well above the monthly average of 138,000 for the previous six months.
The unemployment rate edged down from 7.6 percent in March and has fallen 0.4 percentage point since the start of the year, though it remains high. The Fed has said it plans to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent.
One cautionary note in the employment report: Most of the biggest job gains were in lower-paying fields, such as hotels and restaurants, which added 45,000 jobs, and retail, which added 29,000. Temporary-help firms gained 31,000 positions.
By contrast, construction companies and governments cut jobs. Manufacturing employment was flat.
Some higher-paying sectors added workers. Professional and technical services, which include accounting, engineering and architecture, added 23,000 jobs. Education and health services gained 44,000.
Average hourly pay rose, but the average workweek for private-sector employees dipped 0.2 hour to 34.4 hours. That meant average weekly paychecks declined.
But over the past year, total pay after adjusting for inflation is up 2.1 percent, economists said. That should help boost consumer spending in coming months.
The job growth is occurring while the U.S. economy is growing modestly but steadily. It grew at a 2.5 percent annual rate in the January-March quarter, fueled by the strongest consumer spending in two years.