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US Adds 290K Jobs But Unemployment Rises To 9.9%
5-7-10 12:45 PM EDT | E-mail Article 3rd UPDATE:
(Updates with reaction from U.S. President Barack Obama, more economist comments.)
By Luca Di Leo
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- The U.S. economy in April added jobs at the fastest pace in four years, suggesting the recovery is gaining momentum. But the unemployment rate unexpectedly rose, in a sobering reminder the labor market will take a long time to heal.
The government Friday said nonfarm payrolls rose by a higher-than-expected 290,000 last month, the largest increase since March 2006, lifted by strong employment gains in the private sector. That followed an upwardly revised 230, 000 increase in March.
Economists polled by Dow Jones Newswires were expecting payrolls to rise by 180,000. The March figure was originally reported as a 162,000 increase.
Taking into account revisions to prior months, the U.S. economy added an average of 143,000 jobs a month in the first four months of the year, fueling optimism about the job market's recovery.
However, as a reminder of the labor market's continued weakness, the unemployment rate increased to 9.9% last month as previously discouraged workers started to look for work again. Economists were expecting it to remain at March's 9.7% level.
Following a severe recession, the U.S. economy has lost nearly 8.5 million jobs over the past two years, more than half of today's total unemployed. Although the downturn probably ended 10 months ago, companies have until recently been reluctant to ramp up hiring as they awaited for more evidence of a stronger economy, and focused on producing more with fewer workers in the meantime. The strong April jobs report, including upward revisions to prior months, may be the first evidence firms now feel more confident to take on new workers.
"It's a strong signal that the economic recovery is becoming self-sustaining. In short, it could well be a game changer," said Paul Ashworth, economist at Capital Economics, who is usually cautious about the U.S. economy's strength.
The U.S. recovery is slowly starting to look more sustainable after consumer spending and business investment rose at a healthy pace in the first quarter, providing hope they will make up for the fading government stimulus later in the year.
The report Friday showed that the private sector created 231,000 jobs. Employment in professional business services rose by 80,000. Manufacturing continued to trend up, rising by 44,000. The industry, which is leading the economy's recovery, has added 101,000 jobs since December. Construction, a sector that has been suffering, added 14,000 jobs in April.
Total government employment, which includes state and local jobs, rose by 59, 000, helped by the influx of Census workers. The decennial Census accounted for 66,000 of the employment boost last month, less than what economists had forecast and a sign the increase may be higher in May.
Calling the report "very encouraging," U.S. President Barack Obama said the economy's steady growth is starting to give firms the confidence to expand and hire new people.
But he cautioned: "We've got to be mindful that today's job numbers, while welcome, leave us with a lot of work to do. It's going to take time to achieve the strong and sustained job growth that is necessary."
Despite the improvement, the jobs increase was not fast enough to make up for the many frustrated people who are returning to the labor market, indicating it will take a long time for the jobless rate to come down.
As the economy recovers, improving job prospects lure more people into the labor force. Economists expect the unemployment rate to fall very slowly as discouraged job seekers who had stopped looking for work return to the labor force and are counted as unemployed.
Employment gains of as much as 150,000 a month may be needed to keep unemployment from rising further, said Sung Won Sohn, economist at the California State University.
The government report showed the size of the labor force rose by 805,000 in April, higher than the 550,000 employment rise as measured by the Labor Department's household survey, which is separate to the payrolls survey.
The U.S. Federal Reserve expects the unemployment rate to remain above 9% until the end of 2010 as the economy continues to recover only slowly.
The jobs report shouldn't change the Federal Reserve's view that short-term interest rates must remain at a record low for an "extended period." At its last meeting April 27-28, the Fed said the economy was strengthening and the jobs market was starting to improve, but kept rates close to zero to support a fragile recovery.
"It's going to take more data. The change in the Fed's "extended period" is still a long ways off," said Stuart Hoffman, chief economist for PNC Financial Services Group.
In a sign the labor market remains weak, the April report showed that the number of people unemployed for 27 weeks or more rose by 169,000 to 6.7 million - almost half of all unemployed people.
In his latest assessment of the economy April 14, Fed Chairman Ben Bernanke stressed he was concerned that so many of those unemployed have been without a job for six months or more. Long periods without work makes people lose their skills, making it harder for them to find a new job.
Signaling there's still a lot of slack in the US jobs market and that inflation pressures remain contained, the report also showed that average hourly earnings of all employees rose by just $0.01 to $22.47 in April.
The Labor Department's jobs report be accessed at: http://www.bls.gov/ news.release/empsit.toc.htm
-By Luca Di Leo and Jeff Bater, Dow Jones Newswires; 202-862-6682; luca.dileo@ dowjones.com
http://news.morningstar.com/newsnet...J/201005071245DOWJONESDJONLINE000583_univ.xml
http://news.morningstar.com/newsnet...J/201005071245DOWJONESDJONLINE000583_univ.xml
5-7-10 12:45 PM EDT | E-mail Article 3rd UPDATE:
(Updates with reaction from U.S. President Barack Obama, more economist comments.)
By Luca Di Leo
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- The U.S. economy in April added jobs at the fastest pace in four years, suggesting the recovery is gaining momentum. But the unemployment rate unexpectedly rose, in a sobering reminder the labor market will take a long time to heal.
The government Friday said nonfarm payrolls rose by a higher-than-expected 290,000 last month, the largest increase since March 2006, lifted by strong employment gains in the private sector. That followed an upwardly revised 230, 000 increase in March.
Economists polled by Dow Jones Newswires were expecting payrolls to rise by 180,000. The March figure was originally reported as a 162,000 increase.
Taking into account revisions to prior months, the U.S. economy added an average of 143,000 jobs a month in the first four months of the year, fueling optimism about the job market's recovery.
However, as a reminder of the labor market's continued weakness, the unemployment rate increased to 9.9% last month as previously discouraged workers started to look for work again. Economists were expecting it to remain at March's 9.7% level.
Following a severe recession, the U.S. economy has lost nearly 8.5 million jobs over the past two years, more than half of today's total unemployed. Although the downturn probably ended 10 months ago, companies have until recently been reluctant to ramp up hiring as they awaited for more evidence of a stronger economy, and focused on producing more with fewer workers in the meantime. The strong April jobs report, including upward revisions to prior months, may be the first evidence firms now feel more confident to take on new workers.
"It's a strong signal that the economic recovery is becoming self-sustaining. In short, it could well be a game changer," said Paul Ashworth, economist at Capital Economics, who is usually cautious about the U.S. economy's strength.
The U.S. recovery is slowly starting to look more sustainable after consumer spending and business investment rose at a healthy pace in the first quarter, providing hope they will make up for the fading government stimulus later in the year.
The report Friday showed that the private sector created 231,000 jobs. Employment in professional business services rose by 80,000. Manufacturing continued to trend up, rising by 44,000. The industry, which is leading the economy's recovery, has added 101,000 jobs since December. Construction, a sector that has been suffering, added 14,000 jobs in April.
Total government employment, which includes state and local jobs, rose by 59, 000, helped by the influx of Census workers. The decennial Census accounted for 66,000 of the employment boost last month, less than what economists had forecast and a sign the increase may be higher in May.
Calling the report "very encouraging," U.S. President Barack Obama said the economy's steady growth is starting to give firms the confidence to expand and hire new people.
But he cautioned: "We've got to be mindful that today's job numbers, while welcome, leave us with a lot of work to do. It's going to take time to achieve the strong and sustained job growth that is necessary."
Despite the improvement, the jobs increase was not fast enough to make up for the many frustrated people who are returning to the labor market, indicating it will take a long time for the jobless rate to come down.
As the economy recovers, improving job prospects lure more people into the labor force. Economists expect the unemployment rate to fall very slowly as discouraged job seekers who had stopped looking for work return to the labor force and are counted as unemployed.
Employment gains of as much as 150,000 a month may be needed to keep unemployment from rising further, said Sung Won Sohn, economist at the California State University.
The government report showed the size of the labor force rose by 805,000 in April, higher than the 550,000 employment rise as measured by the Labor Department's household survey, which is separate to the payrolls survey.
The U.S. Federal Reserve expects the unemployment rate to remain above 9% until the end of 2010 as the economy continues to recover only slowly.
The jobs report shouldn't change the Federal Reserve's view that short-term interest rates must remain at a record low for an "extended period." At its last meeting April 27-28, the Fed said the economy was strengthening and the jobs market was starting to improve, but kept rates close to zero to support a fragile recovery.
"It's going to take more data. The change in the Fed's "extended period" is still a long ways off," said Stuart Hoffman, chief economist for PNC Financial Services Group.
In a sign the labor market remains weak, the April report showed that the number of people unemployed for 27 weeks or more rose by 169,000 to 6.7 million - almost half of all unemployed people.
In his latest assessment of the economy April 14, Fed Chairman Ben Bernanke stressed he was concerned that so many of those unemployed have been without a job for six months or more. Long periods without work makes people lose their skills, making it harder for them to find a new job.
Signaling there's still a lot of slack in the US jobs market and that inflation pressures remain contained, the report also showed that average hourly earnings of all employees rose by just $0.01 to $22.47 in April.
The Labor Department's jobs report be accessed at: http://www.bls.gov/ news.release/empsit.toc.htm
-By Luca Di Leo and Jeff Bater, Dow Jones Newswires; 202-862-6682; luca.dileo@ dowjones.com
http://news.morningstar.com/newsnet...J/201005071245DOWJONESDJONLINE000583_univ.xml
http://news.morningstar.com/newsnet...J/201005071245DOWJONESDJONLINE000583_univ.xml
