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 March 05, 2015 08:35 GMT
ECONOMY-THE DAY AHEAD
WASHINGTON (AP) -- The Labor Department will report today on the number of people who applied for unemployment benefits last week. The department will also issue its revised report on fourth-quarter productivity. And the Commerce Department will report on U.S. factory orders for January. Also today, Freddie Mac will release average mortgage rates.
The jobs market has been steadily improving in recent months.
And a private survey Wednesday showed that U.S. businesses added more than 200,000 jobs in February for the 13th straight month. It was the latest sign that strong hiring should boost the economy this year.
Payroll processor ADP says companies added 212,000 jobs last month, a solid gain, though down from 250,000 in the previous month. January's figure was revised up from 213,000. The figures come just before tomorrow's government report on the labor market, which economists forecast will show an increase of 240,000 jobs, according to a survey by data provider FactSet. The unemployment rate is expected to fall to 5.6 percent from 5.7 percent.
BEIJING (AP) -- China is setting a lower economic growth target for this year and is promising to open more industries to foreign investors as it tries to make its slowing, state-dominated economy more productive.
In a report to the National People's Congress, Premier Li Keqiang (lee kuh-TYAHNG') says the growth target of about 7 percent, down from last year's 7.5 percent, is in line with efforts to create a "moderately prosperous society." Actual economic growth last year was 7.4 percent, the lowest since 1990.
The ruling Communist Party is in the midst of a marathon effort to guide the world's second-largest economy to slower but more self-sustaining growth based on domestic consumption and services. It is trying to replace a worn-out model driven by trade and investment in construction and heavy industry that has left China's air and water badly polluted.
JOHNSON & JOHNSON-PHARMACYCLICS
Report: J&J close to deal to buy partner Pharmacyclics
UNDATED (AP) -- Health care giant Johnson & Johnson reportedly is close to buying biopharmaceutical company Pharmacyclics, its longtime partner in developing the blood cancer treatment Imbruvica.
London's Financial Times reports "people familiar with the matter" say Johnson & Johnson's anticipated offer would value Pharmacyclics of Sunnyvale, California, above its current $17 billion market capitalization. Those sources said a deal could be announced within days but might unravel.
J&J spokeswoman Amy Meyer declined to comment.
Pharmacyclics shares surged on the rumor, jumping 6.3 percent in regular trading and another 3 percent after hours to $237.48.
Johnson & Johnson, based in New Brunswick, New Jersey, usually makes mid-sized acquisitions worth several billion dollars, but paid $21.3 billion in 2011 for Synthes, a Swiss maker of orthopedic surgical equipment. J&J has annual revenue of $74 billion.
MANDARIN ORIENTAL-DATA BREACH
NEW YORK (AP) -- Upscale hotel chain Mandarin Oriental says it is investigating a potential credit card breach at its hotels.
"Unfortunately incidents of this nature are increasingly becoming an industrywide concern," the company said in an emailed statement. Mandarin Oriental said it is coordinating with credit card agencies and forensic specialists. The company didn't disclose how many hotels were affected nor how many customers reported fraudulent charges on their credit cards.
Mandarin Oriental operates hotels across the world including Paris, Shanghai, Hong Kong, London, New York, Miami, San Francisco, Prague, Boston, Las Vegas, Macau and Barcelona.
The breach was first reported by cybersecurity news website KrebsOnSecurity.
WILMINGTON, Del. (AP) -- A Delaware judge is eyeing approval of a $275 million settlement in a shareholder lawsuit alleging that videogame maker Activision Blizzard was shortchanged in a $6 billion buyback of shares from French media conglomerate Vivendi SA in 2013.
Following a hearing Wednesday, the judge said he viewed the settlement favorably, and that the defendants were providing reasonable value to settle the claims against them.
An attorney for the lead plaintiff told the judge that the $275 million settlement is the largest ever in a derivative suit, in which shareholders sue on behalf of a company.
The lawsuit alleged that Activision executives and directors, working with Vivendi, breached their fiduciary duties by entering into a deal that improperly benefited CEO Bobby Kotick and co-chairman Brian Kelly.
ELIZABETH, N.J. (AP) -- Democratic lawmakers and environmentalists are criticizing a proposed legal settlement between Republican New Jersey Gov. Chris Christie's administration and Exxon Mobil over oil and chemical contamination.
The state had sought $9 billion in damages. But a person familiar with the matter says the settlement is for about $250 million. The person wasn't authorized to speak before details were released publicly and spoke Wednesday to The Associated Press on the condition of anonymity.
Assembly Speaker Vincent Prieto is planning a public hearing. Senate President Steve Sweeney and Sen. Ray Lesniak have threatened a lawsuit.
A judge found Exxon liable in 2008 for contamination in Bayonne and Linden. But there's been no ruling on damages.
Irving, Texas-based Exxon Mobil Corp. had said damages should be capped at $3 million.
CAMDEN, N.J. (AP) -- A bankruptcy court judge says more time is needed to seek higher bids for Atlantic City's former Revel Casino Hotel.
Judge Gloria Burns delayed a decision Wednesday on the proposed $82 million sale of the shuttered gambling hall to Florida developer Glenn Straub.
She did so after Los Angeles developer Izek Shomof expressed interest in buying Revel, but for $2 million less.
Leo Pustilnikov, Shomof's partner, says he's interested in making a formal bid soon.
Burns says she's giving Revel AC and potential bidders time to work out the best possible deal for the shuttered casino.
A new hearing is set for March 12.
Two previous sales of Revel have fallen through.
The $2.4 billion casino closed in September after two years of operation, and never turned a profit.
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