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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 November 26, 2014 19:13 GMT
WASHINGTON (AP) -- The number of people seeking U.S. unemployment benefits jumped last week, pushing total applications above 300,000 for the first time in nearly three months.
The Labor Department says weekly applications rose 21,000 to a seasonally adjusted 313,000, the highest level since the first week of September. The four-week average, a less volatile measure, rose 6,250 to 294,000.
The increase is unlikely to raise concerns about the broader health of the job market. At least some of the rise occurred because of seasonal layoffs in businesses affected by the cold weather, such as construction. The department seeks to control for such seasonal factors but doesn't always do so perfectly.
Applications had been under 300,000 for 10 straight weeks, an unusually low level that indicates companies are laying off few workers.
WASHINGTON (AP) -- U.S. consumers picked up spending by a modest amount in October, a slight improvement after no gain at all in the previous month.
The Commerce Department says consumer spending rose 0.2 percent last month, while September was revised from a decline to a flat reading. Income grew 0.2 percent in October, matching the modest September gain.
Spending is closely watched because it accounts for 70 percent of economic activity. Solid job gains this year are helping to lift spending, which is giving a bolstering the overall economy.
Economic growth came in at a solid 3.9 percent in the July-September quarter. Economists are looking for growth of around 2.5 percent in the current quarter, and they believe 2015 will see further spending gains and growth of around 3 percent.
WASHINGTON (AP) -- Orders to U.S. factories for long-lasting manufactured goods rose in October, but a key category that tracks business investment plans declined sharply for a second straight month.
The Commerce Department says orders for durable goods increased 0.4 percent last month following a 0.9 percent drop in September and an even bigger 18.3 percent plunge in August. The two months of declines reflected big swings in the volatile category of commercial aircraft.
The small October gain was unimpressive, with declines in a number of categories including machinery, computers and primary metals such as steel.
A key category viewed as a proxy for business investment spending fell 1.3 percent in October after a similar 1.3 percent September drop. It was the biggest setback since a 1.4 percent May decline.
NEW HOME SALES
WASHINGTON (AP) -- Sales of new U.S. homes edged up modestly in October, led by a big jump in activity in the Midwest.
The Commerce Department says new home sales advanced 0.7 percent last month to a seasonally adjusted annual rate of 458,000. That followed a smaller 0.4 percent gain in September and put sales at the highest point since May.
The strength last month came from a big 15.8 percent increase in sales in the Midwest and a smaller 7.1 percent rise in the Northeast. Those increases offset a 1.9 percent fall in sales in the South, which accounts for half of the new-home market, and a 2.7 percent drop in the West.
Housing has struggled to recover since the recession ended in June 2009.
WASHINGTON (AP) -- The number of Americans signing contracts to buy homes fell slightly in October as tight credit and lagging wages remained financial hurdles for would-be homebuyers.
The National Association of Realtors says its seasonally adjusted pending home sales index fell 1.1 percent the past month to 104.1. The index remains below its 2013 average but is 2.2 percent higher than last October.
Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.
Housing has struggled to fully rebound since the recession ended more than five years ago. Many potential buyers lack the savings and strong credit history needed to afford a home, causing them to rent or remain in their existing houses instead of upgrading.
WASHINGTON (AP) -- Average U.S. long-term mortgage rates ticked down for the third straight week, a positive trend for potential homebuyers.
Mortgage company Freddie Mac says the nationwide average for a 30-year mortgage declined to 3.97 percent this week from 3.99 percent last week. Rates are now about a half-point lower than at the beginning of the year.
Long-term mortgage rates fell as low as 3.31 percent toward the end of 2012, partly because of the Federal Reserve's bond-purchase program, which was intended to keep rates low. That program has since ended.
Rates have fallen in recent weeks amid economic slowdowns in Europe and China and the start of a recession in Japan.
The average for a 15-year mortgage, a popular choice for people who are refinancing, was unchanged at 3.17 percent.
WASHINGTON (AP) -- Greater optimism about income growth and future spending pushed U.S. consumer sentiment to a fresh 7-year high in November.
The University of Michigan says its index of consumer sentiment rose to 88.8 in November from 86.9 in October. That's the highest since July 2007, five months before the Great Recession began.
The report adds to a mixed picture of U.S. consumers heading into the holiday shopping season. A separate measure of consumer confidence, released Tuesday, fell sharply after reaching its own 7-year high last month. And Americans are spending at a sluggish pace despite a pickup in job creation this year.
Still, the Michigan survey found consumers said they were more likely to spend on big-ticket items such as appliances and autos than at any time since the recession began.
AIR BAG RECALL DEMAND
DETROIT (AP) -- U.S. safety regulators are threatening fines and legal action against Takata Corp. for failing to admit that its driver's-side air bag inflators are defective and should be recalled nationwide.
The National Highway Traffic Safety Administration sent a letter to the company Wednesday detailing the threats, which include a public hearing and possible court action.
Takata of Japan has refused demands for the national recall, saying that a recall limited to high-humidity states is sufficient. But the agency says two inflators have ruptured in cars outside the high-humidity zone, injuring drivers by spewing metal fragments.
Transportation Secretary Anthony Foxx says Takata must act quickly or the agency will use all of its authority and resources to get the national recall done.
WASHINGTON (AP) -- The Obama administration is announcing steps to cut levels of smog-forming pollution linked to asthma, lung damage and other health problems.
The Environmental Protection Agency is calling for a new, lower threshold for ozone pollution of 65 to 70 parts per billion. That's down from the current standard of 75 parts per billion, put in place by President George W. Bush in 2008.
But the EPA is leaving open the possibility it could enact an even lower standard of 60 parts per billion sought by environmental groups.
The EPA estimates that meeting the stricter rules will cost industry about $3.9 billion in 2025 if the government goes with a standard of 70 parts per billion. At a level of 65 parts per billion, the EPA said, the cost grows to $15 billion.
Industry groups say the cost would actually be far higher and that it would be nearly impossible for refineries and other businesses to comply. But EPA Administrator Gina McCarthy says lower ozone standards would actually spur more businesses, investment and jobs by making communities healthier.
The EPA was under a court-ordered Dec. 1 deadline to issue a new smog standard.
WASHINGTON (AP) -- A White House veto threat appears to have put on ice a congressional effort to permanently renew a handful of generous tax breaks for businesses and individuals. Officials say that the plan, brewing behind closed doors on Capitol Hill, favored corporations over the working class.
The unusual veto threat came before the parameters of a potential agreement were even revealed.
Speculation on Capitol Hill on Tuesday focused on a potential agreement to permanently enact tax breaks on business investments in new equipment and research and development, part of a plan that would renew dozens of expired tax breaks for businesses and individuals.
The White House immediately threatened a veto, saying Congress should also make permanent more generous tax credits for the working poor and people with children.
WASHINGTON (AP) -- Many immigrants in the United States illegally who apply for work permits under President Barack Obama's new executive actions would be eligible for Social Security and Medicare benefits upon reaching retirement age, according to the White House.
Under Obama's actions, immigrants who are spared deportation would be eligible to obtain work permits and a Social Security number. As a result, they would pay into the Social Security system through payroll taxes.
Not all such immigrants would be entitled to the benefits, however, because like all Social Security and Medicare recipients they would have to work 10 years to become eligible for retirement payments and health care.
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