The job growth helped lower the unemployment rate to 5.4 percent from 5.5 percent in March, the Labor Department said Friday. That is the lowest rate since May 2008, six months into the Great Recession.
The level of hiring signaled that companies were confident enough in their outlook last month to fill positions.The job growth, if sustained, could fuel an economic rebound after a January-March quarter in which the U.S. economy is thought to have shrunk.“Today’s report argues that the economy is in decent health,” says Scott Clemons, chief investment strategist at Brown Brothers Harriman Private Banking.
U.S. stock prices rose sharply when trading began an hour after the jobs report was released at 8:30 a.m. Eastern time. Still, Friday’s figures included signs of concern: A weak March job gain was revised sharply down to just 85,000 from 126,000. In the past three months, employers have added 191,000 positions, a decent gain but well below last year’s average of 260,000.
And the job growth isn’t raising worker pay much. Average hourly wages rose just 3 cents in April to $24.87. Wages have risen 2.2 percent over the past 12 months, roughly the same sluggish pace of the past six years.
Clemons said he was surprised by the meager gain in earnings. “Everything in this cycle has been slow-motion,” he said, referring to the modest recovery from the 2007-2009 Great Recession. “Maybe wages are another example of that.”
Tara Sinclair, a professor at George Washington University and chief economist at the job listings service Indeed, said: “We’re definitely back to that same discussion we were having before March and earlier this year: Things are looking pretty good and going in the right direction, but where is the wage growth?”
Ad The Federal Reserve has been monitoring the job market for convincing evidence of a healthier economy. The chronically sluggish pay growth and the downward revision to March’s job gain may dissuade the Fed from raising interest rates from record lows anytime soon.
The “Fed could be on hold forever with anemic numbers like these,” said Tom di Galoma, head of fixed income trading for ED&F Man Capital Markets. Other economists suggested that the Fed isn’t likely to raise its key benchmark rate until late this year or perhaps not until next year. Some trends that held back growth earlier this year remained evident in Friday’s jobs report.
The mining industry, which includes oil and gas, cut 15,000 jobs, its fourth straight loss. Oil drilling has fallen sharply after last year’s plunge in oil prices. Manufacturers added only 1,000 jobs after a flat reading in March.
That’s down from the industry’s average monthly job gain of 18,000 last year. A strengthened dollar, which makes U.S. exports costlier overseas, is slowing factory output. Construction companies, though, picked up much of the slack by adding 45,000 jobs, the most in 16 months. And he health care industry gained 56,000 jobs.
Such solid figures add to other evidence that the economy may be gradually picking up. Home sales staged a big comeback in March, a sign more Americans are making expensive purchases. People bought existing homes at an annual pace of 5.19 million, the National Association of Realtors said.
Those gains are expected to extend into April based on figures on signed contracts released by the Realtors. That would help spur additional growth in the construction sector as builders seek to meet demand. Some Americans also appear to be gradually stepping up their spending.
Service firms such as restaurants, retailers and banks grew at a faster pace in April than in March, according to a survey by the Institute for Supply Management, a trade group of purchasing managers.
washingtonpost.com
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