Job growth surged last month as retailers, builders, health-care providers and other employers expanded their payrolls, suggesting that...
WASHINGTON — Job growth surged last month as retailers, builders, health-care providers and other employers expanded their payrolls, suggesting that businesses remained upbeat about the economy’s future strength despite its recent softness.
The nation’s unemployment rate held steady at 5.2 percent last month as employers hired 274,000 additional workers, the Labor Department reported yesterday, while also boosting its counts by a total of 93,000 jobs for February and March.
The 274,000 net number of jobs added last month was roughly 100,000 more than economists had expected.
“It is a surprisingly strong report, it’s across the board, and it’s good news for the economy,” said William Ford, former president of the Atlanta Federal Reserve Bank, now a professor at Middle Tennessee State University. “People are now going to be more concerned about inflation and less about the soft patch.”
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Employers have added an average 211,000 jobs a month this year, a pace that should bring the jobless rate down over time and a pickup from the average last year of 183,000 a month.
The April jobs report appeared to reflect the economy’s underlying good health, even though it followed a string of other reports showing the expansion had lost steam in recent months, analysts said.
U.S. economic growth slowed sharply in the January-through-March quarter, to a 3.1 percent annual rate, the lowest in two years, as businesses and consumers pulled back on spending, energy costs rose and the trade deficit widened.
The firm labor market “does suggest that the economy may not be as weak as many previously expected,” said Richard Yamarone, chief of economic research at Argus Research. “If businesses are truly worried about sluggish demand, lofty energy prices and higher interest rates, they wouldn’t engage in the costly practice of adding workers at such an elevated rate.”
Stock prices were little changed after the report was released. Stronger hiring could mean bigger profits for companies that benefit from the extra spending, or smaller profits if the Federal Reserve decides to raise interest rates more aggressively to keep inflation in check.
The jobs report is likely to confirm the Fed’s belief that the economic expansion remains solid and self-sustaining, a situation in which rising employment creates more demand, prompting businesses to hire more workers and so on. That means the economy no longer needs the added stimulus of very low interest rates, justifying the Fed’s plan to raise them high enough to keep inflation contained.
Fed officials want the labor market to keep improving after several years of job losses followed by sluggish employment growth and lackluster wage gains for most workers. Employers have been adding workers every month since June 2003, but it wasn’t until January of this year that they had restored all the jobs lost during the 2001 recession and initial “jobless recovery” that followed.
With job growth steady and strong, Fed officials have turned their attention to the question of whether rising labor costs — including wages and benefits — will fuel more inflation.
Another Fed interest-rate increase next month is “a virtual certainty,” said Peter Kretzmer, senior economist for Bank of America, echoing the sentiments of other analysts.
The payroll gains last month were widespread across industries, with increases reported in finance, real estate, trucking, telecommunications, construction and the movie and recording industries. State and local governments also added workers.
Manufacturers, airlines, publishers, gas stations and the federal government were among the employers that cut jobs.
Average weekly earnings for most workers rose by $4.88 to $542.40. Average hourly earnings rose to $16, up a nickel, for private production and nonsupervisory workers, who account for 80 percent of the work force.
The unemployment rate for white workers was unchanged last month at 4.4 percent. Black unemployment rose to 10.4 percent from 10.3 percent in March, while Latino unemployment rose to 6.4 percent from 5.7 percent.
Analysts said the economy was bound to slow this year after growing at a very fast 4.4 percent last year, and the recent spike in energy prices may have caused it to cool sooner and faster than expected.
Information from The Associated Press and Bloomberg News is included in this report.