Unemployment rate falls to 7.5% from 7.6%
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — The pace of hiring snapped back in April after a surprising dip in March, suggesting that job creation in the U.S. is holding steady despite a raft of signs pointing to a third straight midyear slowdown in the economy.
The U.S. created a net 165,000 jobs in April, the Labor Department said Friday. The increase surpassed the 135,000 forecast of economists polled by MarketWatch.
What’s more, the economy created an additional 124,000 jobs in March and February than previously reported.
The number of new jobs created in March was revised up to 138,000 from 88,000, the Labor Department said, while February’s figure was revised up to 332,000 from 268,000. The number of jobs created in February was the highest since November 2005 for any month that did not include temporary Census bureau hiring.
The acceleration in hiring nudged the unemployment rate down to 7.5% from 7.6% in March. That’s the lowest level since December 2008, the month before President Obama took office.
The unemployment rate fell even though the size of the labor force increased, which is a good sign. People enter the labor force when they think there’s a better chance of finding work.
U.S. stock futures SPM3 +0.65% rose while Treasurys weakened after the data was released, in line with a market seeing better growth prospects.
The increase in hiring took place entirely in the private sector, which added 176,000 jobs. In April, professional services added 73,000 workers; bars and restaurants hired 38,000 people; and the retail business generated 29,000 jobs.
The construction industry cut 6,000 jobs, however, and government eliminated 11,000 positions.
The state, local and federal government have cut almost a half-million jobs in the past five years, and the onset of billions of dollars in spending cuts under a law known as the sequester could further dampen government hiring. Some agencies are leaving open positions unfilled or are relying less on independent contractors, particularly the military.
Evidence of the sequester’s effects was expected to start to show up in the April report since the spending cuts didn’t kick in until late March, but there was little evidence.
Economists say reduced federal spending could act as a drag on hiring and U.S. growth at least through the summer. And a host of recent reports appear to support the view that growth has softened after a fast start to 2013.
Still, most economists don’t expect job growth to flag all that much. One reason: employees are already working longer hours. Companies won’t be able keep increasing production unless they add more staff. The average workweek, which fell two ticks in April to 34.4 hours, remains near a prerecession high. The workweek usually rises when the economy gets stronger.
What might also entice companies to beef up is the slow rate of wage growth. Hourly earnings edged up 4 cents in April to $23.87, but they’ve risen only 1.9% over the past 12 months.
On the other hand, inflation has largely eaten up the wage gains of workers, leaving them little extra purchasing power. Unless Americans are able to buy more goods and services, businesses are unlikely to see the kind of demand that would spur them to rapidly pad their payrolls.
The sluggish pace of hiring since the end of the Great Recession in mid-2009 is a big reason why the U.S. is expanding at a rate well below the historical norm at this stage of a recovery. The unemployment rate is an even larger 13.9%, up from 13.8% in March, if everyone who wants a full-time job but can’t find one is included.
What’s worse, some 4.4 million people have been unable to find a job in the past six months, a number that historically high at this stage of a recovery. The longer those people stay out of work the more their skills erode, making them less attractive to employers.
So far efforts by U.S. lawmakers and the Federal Reserve have been unable to make a big dent in the number of long-term unemployed.
