Unexpected hiring boost lifts economy
WASHINGTON -- There's fresh hope for jobseekers that companies will be posting more help-wanted signs.
Employers boosted payrolls last month by a brisk 274,000 jobs -- roughly 100,000 more expected. The unemployment rate, meanwhile, held steady at 5.2 percent.
"We've had millions of people standing on the side for a long time waiting for job openings. They should feel more comfortable jumping into the labor pool now," said Bill Cheney, chief economist at John Hancock Financial Services.
The latest snapshot of the nation's employment climate, released by the Labor Department on Friday, also eased fears about the economy getting stuck in the soggy spot it hit in March.
April's payroll growth marked an improvement from the 146,000 new jobs created in March. Economists also were heartened to see that revised figures showed employers added 93,000 more jobs in February and March combined than the government previously estimated.
"The economy appears to be snapping back and the soft patch has probably evaporated," said Lynn Reaser, chief economist at Bank of America Capital Management. "Jobseekers can now look forward to a more receptive climate. We are seeing jobs open up over a wide swath of industries."
Payroll gains were widespread. Retailers, bars and restaurants, health-care providers, construction companies and financial services all showed employment rising. Factories, however, lost jobs for the second straight month. Clothing, automobile, food and furniture makers were among the manufacturers where employment declined.
"Manufacturing sectors shedding jobs are those still facing stiff import competition, particularly from Asia," where currencies are kept artificially low against the U.S. dollar, putting U.S. manufacturers at a big competitive disadvantage, said David Huether, chief economist at the National Association of Manufacturers. High energy costs also are putting a strain on manufacturers, he said.
Still, April's growth in overall hiring suggests companies are optimistic about the economy's prospects despite expensive energy bills, analysts said.
Consumers, on the other hand, appear to be feeling less buoyant about the economy. An AP-Ipsos consumer confidence index dropped to 78.2 in early May, the lowest reading since October 2003, as surging energy bills and higher borrowing costs weighed on consumers' psyches.
On Wall Street, the Dow Jones industrials gained just 5.02 to close at 10,345.40 as the stronger-than-expected jobs report made investors fret about the prospects of more aggressive rate action by the Federal Reserve.
To combat inflation, the Fed boosted interest rates on Tuesday by one-quarter percentage point to 3 percent. It was the eighth increase of that size since the Fed began to tighten credit last June. The Fed is expected to keep pushing up rates through much of this year.
Workers' average hourly earnings rose in April to $16, up 0.3 percent from March's $15.95. From an economic point of view that suggests inflation pressures are mild, not worrisome, analysts said. For workers, though, wage gains are not keeping pace with inflation, another factor that may be damping consumer confidence, economists said.
"Families are feeling the squeeze," said Sen. Jack Reed, D-R.I.
White House spokesman Scott McClellan, however, credited the president's "pro-growth policies" for the hiring pickup.
For people looking for jobs, challenges remain. There were 7.7 million people unemployed in April, with the average duration of 19.6 weeks without work.
However, the share of the working-age population employed or actively seeking a job rose in April to 66 percent. That was up from 65.8 percent in March, which was a nearly 17 year low first reached in January.
Economists also were encouraged to see that the work week increased to 33.9 hours in April, after five straight months of being flat. They said that may be a sign hiring will continue to improve.
The positive news on jobs comes after some earlier reports suggested the economy had lost momentum.
The government reported last week that in the first quarter of 2005, the economy grew at a 3.1 percent annual rate, its slowest pace in two years as high energy prices crimped consumer and business spending.
Oil prices, which set a new all-time high of $57.27 a barrel at the beginning of April, have retreated somewhat since then.
Friday's jobs report, along with news Thursday that shoppers gave a modest boost to retail sales in April, made some analysts feel that economic growth will now rebound solidly.