Job Creation Much Better Than Expected; Rate Hits 9%
ECONOMY, EMPLOYMENT, UNEMPLOYMENT, NONFARM PAYROLLS
| 06 May 2011 | 10:37 AM ET
U.S. private employers shrugged off high energy prices to add jobs at the fastest pace in five years in April, pointing to underlying strength in the economy, even as the jobless rate rose to 9.0 percent.
Private sector hiring, including a big jump in the retail sector, boosted overall nonfarm payrolls by 244,000, the largest increase in 11 months, the Labor Department said Friday. Economists had expected a gain of only 186,000.
The private sector created 268,000 new jobs, the most since February 2006, while government payrolls shrank.
The data suggested the economic recovery would regain speed this quarter after stumbling in the first three months of the year, a view that had suffered setbacks earlier this week as other reports pointed to a slowing in the labor market.
"We're getting close to the point where we are seeingsustainable job growth. That creates income that generates spending and, hopefully, more jobs," said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis, Missouri.
U.S. stocks opened higher on the report, which knocked down U.S. government bond prices. The dollar initially rose against the euro, but later gave up those gains.
The U.S. economy has now created jobs for seven straight months, but the gains have been too meager to make much of dent in the pool of 13.7 million Americans out of work.
Payroll figures for the previous two months were revised to show 46,000 more jobs were added than previously reported.
The unemployment rate in April backed away from a two-year low of 8.8 percent. It is derived from a separate survey of households, which showed a sharp decline in employment and a modest rise in the size of the labor force.
Economists, however, place more weight on the larger, less-volatile survey of employers.
The White House welcomed the report, which it said was a sign the jobless rate would soon recede.
"If you're putting up jobs numbers like the ones we have been putting up in the last three months — quarter million a month — steadily that's going to bring the unemployment rate down," White House economic adviser Austan Goolsbee told CNBC.
The lofty level of unemployment has been a key reason the Federal Reserve has kept the monetary spigots opened. It is on course to complete a $600 billion round of bond buying at the end of June.
However, the relatively vigorous expansion in payrolls in April, if sustained, could encourage some members of the Fed to begin pushing for interest rates hikes.
"To us it looks like a good recovery taking place in payrolls. We think employment is recovering strongly and will continue to do so throughout 2011," said Michael Shaoul,chairman of Marketfield Asset Management in New York.
The United States has recovered only a fraction of the more than 8 million jobs its lost in the 2007-2009 recession. Even at April's relatively rapid rate of job growth, it would take nearly 2-1/2 years to reclaim all those jobs.
High gasoline and food prices clipped U.S. economic growth in first quarter when the economy grew at a subdued 1.8 percent annual rate. It had expanded at a 3.1 percent clip in the final three months of last year.
Details of the report were generally upbeat with the exception of government employment, which contracted for a sixth straight month in April, shedding 24,000 jobs.
The bulk of gains in payrolls last month were in the private services sector, which created 224,000 new positions after adding 194,000 in March. Within that segment, retail saw a surge of 57,100 jobs and leisure and hospitality added 46,000 new workers.
Employment in the goods-producing industries increased 44,000, with construction payrolls climbing by 5,000 and manufacturing gaining 29,000.
The average workweek held steady at 34.3 hours for a third straight month and no sign of wage inflation, with average hourly earnings rising a mere 3 cents.
Correction: An earlier version of this report incorrectly suggested that a good portion of last month's hiring came from McDonald's, which moved to hire 50,000 workers last month. That hiring came after the reporting period in the jobs report.
Copyright 2011 Thomson Reuters. Click for restrictions.
I approve of taking hats OFF.
But never. No. Never in honor of Barack or the Demos.