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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.
More Business News
Last Update on December 18, 2014 18:59 GMT
NEW YORK (AP) --Wall Street is in rally mode for the second straight day.
The Dow Jones industrial average was up close to 300 points in midday trading. The Nasdaq was ahead nearly 80 and the Standard & Poor's 500 was up more than 30.
Oracle is leading a rally in technology shares after the business software maker reported earnings that were better than expected.
Energy stocks are lagging as the price of crude oil turned lower after an early gain.
WASHINGTON (AP) -- Fewer Americans sought unemployment benefits last week, a sign of solid job security and growing confidence among employers.
The Labor Department says weekly unemployment benefits applications dropped 6,000 to a seasonally adjusted 289,000. That is the lowest level since late October.
The four-week average, a less volatile measure, declined 750 to 298,750.
Applications are a proxy for layoffs. The average has fallen nearly 13 percent in the past year, evidence the job market is improving. Companies are cutting fewer jobs as the economy expands and hiring has picked up.
In the first 11 months of this year, employers have added 2.65 million jobs. That already makes 2014 the best year for hiring since 1999.
WASHINGTON (AP) -- Average U.S. long-term mortgage rates fell this week, with the benchmark 30-year loan rate reaching a new low for the year.
The rates' historically low levels could be a boon to potential homebuyers. Mortgage company Freddie Mac says the nationwide average for a 30-year mortgage dropped to 3.80 percent this week from 3.93 percent last week. It is now at its lowest level since May 2013.
At the beginning of the year, the 30-year rate stood at 4.53 percent.
The average for a 15-year mortgage, a popular choice for people who are refinancing, declined to 3.09 percent from 3.20 percent last week.
Mortgage rates often follow the yield on the 10-year Treasury note, which has fallen to its lowest levels since May 2013. It traded at 2.14 percent Wednesday.
WASHINGTON (AP) -- An index designed to predict the future health of the economy posted a third straight solid gain in November.
The Conference Board says its index of leading indicators increased 0.6 percent in November, matching the revised October gain. The October reading had originally been reported as a 0.9 percent increase. The index posted a 0.8 percent rise in September after being unchanged in August.
Conference Board economists say the widespread gains in the leading index are pointing to strong underlying conditions in the U.S. economy.
The leading index is composed of 10 forward-pointing indictors.
WASHINGTON (AP) -- Manufacturing in the Philadelphia region grew at a much slower pace in December compared with the previous month. But the drop came after factory activity reached its highest levels in 21 years in November.
The Federal Reserve Bank of Philadelphia says its index of regional factory activity dropped to 24.5 this month from 40.8 in November. Last month's reading was the highest since December 1993. Any figure above zero indicates expansion.
The data indicates that manufacturing is still growing at a healthy clip, despite this month's slowdown, and helping to drive a broader economic expansion. The survey found that factories are hiring, but at a much slower pace. Measures of new orders and shipments also fell.
The survey covers manufacturing in Pennsylvania, New Jersey and Delaware.
FORD-AIR BAG RECALL
DETROIT (AP) -- Ford says it's expanding a recall for faulty driver's side air bag inflators to the entire U.S. as demanded by the government.
The move adds 447,000 Ford vehicles to the list of those recalled due to driver's inflators made by Japan's Takata Corp. The inflators can explode with too much force, spewing shrapnel into drivers and passengers.
Ford's action puts pressure on BMW and Chrysler, the only two automakers that haven't agreed to national recalls. The National Highway Traffic Safety Administration made the demand, saying the inflators are dangerous.
Honda and Mazda recalls already are national. Previously the recalls were limited to high-humidity states mainly along the Gulf Coast.
Ford's national recall covers certain 2005 to 2008 Mustangs and 2005 and 2006 GT sports cars.
KENILWORTH, N.J. (AP) -- Drugmaker Merck says it's bought a Swiss biotech company developing cancer drugs as part of its strategy to be a top player in cancer, one of the hottest pharmaceutical research areas.
Merck & Co., based in Kenilworth, New Jersey, will pay up to $110 million upfront to OncoEthix. The privately held company could receive further payments of up to $265 million if it meets targets for testing and product approval.
The deal gives Merck ownership of an experimental treatment called OTX015 that could be the first in a new class of drugs that block proteins involved in cancer cell growth and survival.
The drug demonstrated effectiveness in early-stage testing of patients with blood cancers, and OncoEthix last month began initial patient testing against five different types of solid tumors.
SEATTLE (AP) -- Amazon says it is offering one-hour delivery of thousands of basic products to its Prime customers in Manhattan.
The online retail giant rolled out the service, known as Prime Now, to select areas of Manhattan on Thursday. It provides delivery of household products like paper towels, shampoo, books, toys and batteries.
Amazon says Prime Now is available to customers who are already enrolled in Amazon Prime, a membership service that costs $99 a year. The one-hour delivery costs $7.99 but the company also offers two-hour delivery for free.
Seattle-based Amazon says it hopes to roll the service out to additional cities in 2015.
ARIZONA SHERIFF-IMMIGRATION ENFORCEMENT
PHOENIX (AP) -- An Arizona sheriff known for arresting immigrant workers on charges of using fake or stolen IDs to get jobs is planning to close the controversial squad that investigates such cases.
The ID theft cases marked Maricopa County Sheriff Joe Arpaio's last major foothold in immigration enforcement after his powers to enforce such laws have been curtailed in recent years.
Lawyers for Arpaio told a judge overseeing a challenge to such cases that he intends to close the squad once an investigation concludes in January or February.
Since 2008, Arpaio's office has raided 83 businesses in which more than 700 immigrants have been charged with using fake or stolen IDs to get hired.
A memo by a sheriff's official says the agency will be voluntarily halting its work-related ID theft enforcement.
GAY RIGHTS-APPLE CEO
BIRMINGHAM, Ala. (AP) -- Apple CEO Tim Cook is donating money to help fund a gay rights initiative in his native Alabama and two other Southern states.
The Washington-based Human Rights Campaign announced the contribution Thursday.
The amount isn't being disclosed, but the organization calls it "substantial."
Human Rights Campaign spokesman Jason Rahlan says the group hopes Cook's support will encourage others to support its Project One America campaign in Alabama, Arkansas and Mississippi.
The $8.5 million campaign aims to build acceptance for gays, lesbians, bisexuals and transgendered people in the states.
Cook made headlines in October by coming out as the first openly gay chief executive of a Fortune 500 company.
His announcement came just days after Cook encouraged Alabama to be more accepting of gay rights during a speech in Montgomery.
MOSCOW (AP) -- President Vladimir Putin is promising to fix Russia's economic woes within two years by diversifying, and predicts that the plummeting ruble will soon recover.
In a live, three-hour news conference that has become a Putin holiday tradition, the Russian leader demonstrated unwavering confidence in his domestic policies despite the catastrophic collapse in the ruble. His fierce defiance toward the United States flared throughout as he insisted the West was trying to destroy Russia to grab Siberia's great natural resources.
Despite his tough rhetoric, Putin held out hope for normalizing ties with the West, saying that Russia still hopes to expand its gas supplies to southern Europe using a prospective gas hub on Turkey's border with Greece.
This year Putin held his televised extravaganza from a particularly strong vantage point: An Associated Press-NORC Center for Public Affairs Research poll released Thursday showed his approval rating among Russians stood at 81 percent -- a level far above the ratings for other world leaders.
RIYADH, Saudi Arabia (AP) -- Saudi Arabia's Petroleum Minister Ali Naimi says there are no links between the kingdom's decision to oppose production cuts and politics.
Naimi told the official Saudi Press Agency on Thursday that there are "incorrect information and analyses... linking petroleum decisions with political objectives." He says eventually "others will see that what we are doing will yield the best results for the kingdom."
Last week, Iran's President Hassan Rouhani said that the sharp fall in global oil prices is the result of "treachery," in an apparent reference to Saudi Arabia. The kingdom's rivals are concerned that Saudi Arabia, which is capable of withstanding revenue losses, is forcing lower oil prices to damage their economies.
Naimi says oil prices would be unaffected by production cuts and erode Saudi Arabia's market share.
LONDON (AP) -- Britain's air traffic service says it will compensate airlines for last week's computer glitch that briefly shut down London's busy airspace.
The National Air Traffic Service said late Wednesday "there will be a financial consequence for the company from the delay caused by the technical problem." It says the amount of the rebate to airlines is being calculated.
Passengers caught up in the disruption will have to seek compensation through their airlines.
NATS says an unprecedented computer systems failure Dec. 12 touched off mayhem that caused delays and canceled flights for thousands of passengers.
Chief executive Richard Deakin told British lawmakers Wednesday that "I can guarantee that this particular problem will not happen again but I cannot honestly sit here and say we will never have a computer glitch again."
IRELAND-AER LINGUS-IAG BID
DUBLIN (AP) -- Irish airline Aer Lingus has rejected a takeover bid by the International Consolidated Airlines Group, the parent company of British Airways and Spain's Iberia.
Shares in the Dublin-based carrier surged by as much as 21 percent Thursday amid rumors of a possible bid. Those gains were pared after IAG issued a statement confirming its proposal had been rejected by the Aer Lingus board.
Analysts long have seen IAG as a likely bidder for Aer Lingus. IAG chief executive Willie Walsh was previously chief executive of Aer Lingus before the formerly state-owned airline's 2006 privatization.
Aer Lingus operates a substantial European short-haul network and a half-dozen routes to the United States. In recent years it has struggled to compete with larger Dublin-based rival Ryanair, which has mounted three failed takeover bids.
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