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US Employers Add 175K Jobs, Rate Up to 7.6 Percent
WASHINGTON (AP) — The U.S. economy is adding jobs at a steady pace — enough to show strength in the face of tax increases and government spending cuts if not enough to reduce still-high unemployment.
Employers added 175,000 jobs in May, and the unemployment rate rose to 7.6 percent from 7.5 percent in April, the Labor Department said Friday. The rate rose because more people began looking for work, a healthy sign. About three-quarters found jobs.
The government revised the job figures for the previous two months. April’s gain was lowered to 149,000 from 165,000. March’s was increased slightly to 142,000 from 138,000. The net loss was 12,000 jobs.
Investors appeared pleased by the evidence that job growth remains steady. The Dow Jones industrial average was up nearly 200 points in late-morning trading.
Friday’s job figures provided further evidence of the U.S. economy’s resilience. The housing market is strengthening, auto sales are up and consumer confidence has reached a five-year peak. Stock prices are near record highs, and the budget deficit has shrunk.
The U.S. economy’s relative strength contrasts with Europe, which is gripped by recession, and Asia, where once-explosive economies are now struggling.
Many analysts expect the U.S. economy to strengthen later this year.
‘‘Today’s report has to be encouraging for growth in the second half of the year,’’ said Dan Greenhaus, an analyst at BTIG LLC.
It also eased worries that had arisen after economic reports earlier this week had suggested that the economy might be weakening.
Employers have added an average of 155,000 jobs the past three months. But the May gain almost exactly matched the average increase of the previous 12 months: 172,000.
Analysts said the less-than-robust job growth would likely lead the Federal Reserve to maintain the pace of its monthly bond purchases for at least a few more months. The Fed has said it will keep buying bonds at the same rate until the job market improves substantially. The bond purchases have helped drive down interest rates and boost stock prices.
Stock markets have gyrated in the past two weeks on speculation that the Fed would soon start to taper its $85 billion-a-month in bond buying — a step that could raise rates and cause stock prices to fall.
‘‘I think the Fed will stay on hold,’’ said Nariman Behravesh, chief economist at IHS Global Insight. ‘‘They want to see numbers above 200,000 on payroll jobs on a consistent basis before they start to taper off.’’
Behravesh said he thinks the Fed will maintain its pace of bond buying through this year before scaling it back in 2014.
‘‘Today’s report is perhaps the perfect number for nervous investors,’’ said James Marple, Senior Economist at TD Economics. ‘‘It is strong enough to point to continued economic recovery but not so strong as to bring forward expectations of Fed tapering.’’
Other analysts who have predicted that the Fed would start trimming its bond purchases later this year said they didn’t think Friday’s jobs report would change that timetable.
John Canally, an economist at LPL Financial, blames the Federal Reserve for not specifying how much monthly job growth it wants to see before it scales back its bond buying.
‘‘They have not been transparent enough,’’ Canally said. ‘‘That is what has unhinged markets.’’
Some signs in the report suggested that the spending cuts and weaker global growth are weighing on the job market. Manufacturers cut 8,000 jobs, and the federal government shed 14,000. Both were the third straight month of cuts for those industries.
The number of temporary jobs rose about 26,000, the second straight month of strong gains. That suggests that employers are responding to more demand but aren’t confident enough to hire permanent workers. Many temporary employees work in manufacturing, which cut permanent jobs.
But industries that rely directly on consumer spending hired at a healthy pace — a sign of confidence that consumers will keep spending. Retailers added 28,000 jobs. Restaurants and hotels added 33,000.
Average hourly wages ticked up just a penny in May, to $23.89. That was because much of the job growth was in lower-paying industries.
But mild inflation is boosting American’s purchasing power. Over the past 12 months, hourly wages have risen 2 percent. Inflation has increased just 1.1 percent in that time.
The economy grew at a solid annual rate of 2.4 percent in the first three months of the year. Consumer spending rose at the fastest pace in more than two years. But economists worry that the steep government spending cuts and higher Social Security taxes might be slowing growth in the April-June quarter to an annual rate of 2 percent or less.
Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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Last Update on November 21, 2014 18:31 GMT
BEIJING (AP) -- China's central bank unexpectedly slashed interest rates on Friday to re-energize the world's No. 2 economy, joining a growing list of major economies that are trying to encourage growth in the face of a global slowdown.
On top of the rate cut, Chinese authorities promised to inject credit into the financial system if needed.
The People's Bank of China said it is trying to address "financing difficulties" caused by a shortage of credit. It also said the move was not a change in monetary policy and economic conditions are within an "appropriate range."
China's economic growth fell to a five-year low of 7.3 percent in the latest quarter and manufacturing and other indicators are declining. That has prompted suggestions Beijing might intervene to prop up growth.
FRANKFURT, Germany (AP) -- European Central Bank head Mario Draghi says the chief monetary authority for the eurozone is willing to "step up the pressure" and broaden its stimulus efforts to help the struggling economy.
Draghi said Friday at a banking congress in Frankfurt, Germany that if current efforts do not achieve the desired effect the ECB could "broaden even more the channels through which we intervene."
The ECB has already lowered its benchmark interest rate to near zero and started purchasing bonds made up of bank loans to companies -- an effort to boost lending and economic activity.
Some economists think the bank could widen the bond purchases to include corporate or government bonds in an effort to pump newly created money into the financial system -- so-called quantitative easing, or QE.
WASHINGTON (AP) -- Unemployment rates fell in 34 U.S. states in October, a sign that steady hiring this year has been broadly dispersed through most of the country.
The Labor Department says unemployment rates rose in just 5 states, the fewest since April. Rates were unchanged in 11 states.
Nationwide, employers added 214,000 jobs in October, the ninth straight month of gains above 200,000. That's the longest such stretch since 1995. The U.S. unemployment rate fell to 5.8 percent, a six-year low, from 5.9 percent. Steady economic growth has prompted more companies to add jobs, though the additional hiring hasn't yet boosted wages.
Georgia had the highest unemployment rate, at 7.7 percent, though that was down from 7.9 percent in September. North Dakota continued to have the lowest rate, at 2.8 percent.
DETROIT (AP) -- Toyota is recalling nearly 423,000 Lexus luxury brand cars in the U.S. to fix fuel leaks that can cause fires.
The recalls affect the 2006 to 2011 GS, 2007 to 2010 LS and the 2006 to 2011 IS models.
Toyota says the cars' fuel lines have nickel phosphate plating to protect against corrosion. Some lines could have been built with particles coming in contact with a gasket. That can cause the sealing property to deteriorate and cause fuel leaks.
Toyota says it's not aware of any fires or injuries caused by the problem. The company found it after getting complaints of fuel odors.
Dealers will repair the gasket seating surface at no cost to owners.
Some of the Lexuses were recalled in 2009 to fix leaks in aluminum fuel pipes.
TOKYO (AP) -- Japan's transport ministry has told air bag maker Takata to conduct an internal investigation after cases of its air bags exploding triggered safety concerns in the U.S. and other countries.
Transport Minister Akihiro Ohta said Friday that the ministry ordered Takata Corp. to conduct its own investigation into the air bags and report back. The ministry's direct instruction to an auto parts maker is considered rare.
The ministry also ordered Takata and Japanese automakers to study whether additional recalls are needed at home following a U.S. decision to expand recalls nationwide from an earlier measure limited to high-humidity zones.
Takata air bags can inflate with excessive force, sending metal shrapnel toward the driver and passengers. The problems have caused six deaths and dozens of injuries.
FORD PICKUP-FUEL ECONOMY
DEARBORN, Mich. (AP) -- Ford says its new aluminum-bodied F-150 pickup will get up to 26 mpg on the highway, making it the most fuel efficient gas-powered full-size pickup.
The Ram truck is the current leader among pickups, getting up to 25 mpg on the highway with a gas engine.
Fuel economy is a key data point for the new F-150, which is arriving at dealerships this week. Ford shaved 700 pounds off the weight of the truck by switching the body from steel to lightweight aluminum, a dramatic change for the best-selling vehicle in the U.S.
The F-150 will get 26 mpg on the highway with a 2.7-liter EcoBoost engine, which is a $495 option. That is 13 percent better than the outgoing truck's 23 mpg.
ETHANOL IN GASOLINE
WASHINGTON (AP) -- The Obama administration is delaying a decision on whether to reduce the amount of ethanol in the nation's fuel supply.
Last year the Environmental Protection Agency proposed to reduce the amount of ethanol in fuel for the first time. The decision angered corn growers and ethanol companies who have since lobbied the government to reverse the decision.
The EPA said Friday it expects to make a final decision next year.
The ethanol targets are required by a 2007 law that tried to address global warming, reduce dependence on foreign oil and boost the rural economy by requiring oil companies to blend billions of gallons of biofuels into gasoline annually.
Lawmakers did not anticipate fuel economy would improve as much as it has in recent years, reducing overall demand for gasoline.
WASHINGTON (AP) -- The White House says President Barack Obama's immigration executive actions would boost the economy by expanding the U.S. labor force and increasing worker productivity. It says average wages would rise over a 10 year period, a claim that Obama critics and even some labor allies dispute.
The report by Obama's Council of Economic Advisers estimates the administrative actions would increase the gross domestic product by $90 billion, or 0.4 percent, over 10 years. It says wages for native workers will rise by 0.3 percent by 2024
The report aims to counter critics such as Sen. Jeff Sessions of Alabama, the top Republican on the Senate Budget Committee, who say the executive measures would reduce wages and cost American workers' jobs. AFL-CIO President Richard Trumka also says Obama's moves to provide access to temporary visas could suppress wages in the tech sector.
Obama's actions could spare nearly 5 million immigrants illegally in the U.S. from deportation and make them eligible for work permits.
NEW YORK (AP) -- Online streaming service Aereo says that it has filed for Chapter 11 bankruptcy protection, saying an unfavorable ruling by the U.S. Supreme Court was too difficult to overcome.
In June, the Supreme Court ruled that Aereo operates much like a cable TV company. As a result, the court said the service violates copyright law unless Aereo pays broadcasters licensing fees for offering TV station programs to customers' tablets, phones and other gadgets.
CEO Chet Kanojia said in a statement Friday on the company's website that the Supreme Court decision "effectively changed the laws that had governed Aereo's technology, creating regulatory and legal uncertainty."
Kanojia said that the Chapter 11 filing will allow Aereo Inc. to maximize the value of its business while avoiding the cost and distraction of litigation.
PARIS (AP) -- HSBC says it has been placed under formal investigation in France over services it offered to clients required to pay taxes in France.
In a statement Friday, Switzerland-based HSBC Private Bank said French investigators demanded a 50 million euro ($62 million) bond.
France's government is increasingly cracking down on tax dodgers, including establishing an office dedicated solely to investigating financial crimes.
HSBC said the investigation involves the bank's actions from 2006-2007.
MOSCOW (AP) -- Russia's foreign minister says there should be no intervention in global energy production, even as the country's economy takes a hit from rapidly falling oil prices.
After a meeting with his Saudi counterpart in Moscow, Sergei Lavrov said both Russia and Saudi Arabia did not want oil production targets to be affected by "political or geopolitical designs."
The theory that the United States has manipulated global oil production to bring down prices is a popular theme on state-owned television in Russia, where the economy and state budget are heavily dependent on oil exports.
Also on Monday, Russian Energy Minister Alexander Novak told Russian news agencies that the government was reviewing the possibility of lowering oil production, but still wasn't sure whether such a move would be feasible.
NEW ORLEANS (AP) -- A drilling company says a worker killed in an offshore explosion was cleaning a piece of equipment during routine maintenance at its oil-and-gas platform in the Gulf of Mexico.
Houston-based Fieldwood Energy LLC says another worker suffered "visible injury" and two other workers reported ringing in their ears. The company says the three injured workers have been released from the hospital.
Fieldwood says the worker who was killed Thursday was cleaning a piece of equipment that separates oil from water liquids when an "isolated pressure event" occurred. The company says the victim was employed by the Louisiana company Turnkey Cleaning Services, which specializes in cleaning offshore facilities.
The explosion happened on the Echo Platform, which is about 12 miles offshore near the mouth of the Mississippi River.
DOW CHEMICAL-THIRD POINT
NEW YORK (AP) -- Dow Chemical Co. says it will add four new members to its board of directors after pressure from hedge fund activist Daniel Loeb's Third Point.
Shares of the specialty chemicals maker rose 2.6 percent to $52.82 in morning trading Friday.
The new additions are Mark Loughridge, Raymond Milchovich, Robert Miller, who will join the board in January. Richard Davis will join in May.
Dow has also agreed to include the group in its nominees for election at the 2015 annual meeting nominate.
In January, Third Point disclosed that it bought a stake in Dow, but did not disclose how many shares it bought. Third Point says Dow is its biggest investment.
As recently as last week, Third Point published a website and video pushing Dow to shake up its board and increase shareholder value.
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