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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 July 25, 2014 07:27 GMT
MUMBAI, India (AP) -- Most major Asian stock markets rose today after U.S. unemployment claims fell to an eight-year low and tensions over the downing of a Malaysia Airlines jet eased.
The generally positive sentiment was fueled by favorable U.S. jobs data indicating that the world's largest economy is continuing to recover. On Thursday, U.S. unemployment claims fell to an eight-year low, declining by 19,000 to 284,000.
Japan reports its inflation rate eased slightly in June as a sales tax stunted demand.
Benchmark U.S. crude oil fell below $102 a barrel.
The dollar inched down against the euro and was unchanged against the yen.
ECONOMY-THE DAY AHEAD
WASHINGTON (AP) -- The economic data and corporate financial results slow today, with just one government report on the schedule. The Commerce Department releases durable goods for June this morning.
Orders for durable goods fell 1 percent in May as demand for military equipment fell sharply. Excluding defense-related goods, orders actually rose, and orders for core capital goods, a category that signals business investment, also increased. Factories reported higher demand in May for steel and other metals, computers, and autos.
WASHINGTON (AP) -- An aviation official says global aviation leaders will meet in Montreal next week to initiate discussions on a plan to address safety and security issues raised by the shoot-down of a Malaysia Airlines jet over eastern Ukraine, as well as two other air crashes.
The official said the International Civil Aviation Organization, a U.N. agency, will host the meeting on Tuesday. Other organizations scheduled to participate include the International Air Transport Association, which represents airlines; the Civil Air Navigation Services Organization; and the Airports Council International.
Another meeting is also planned for February. The official spoke on condition of anonymity because he wasn't authorized to speak about the issue by name.
Besides the Malaysia plane, airliners also have crashed in Taiwan and Mali in bad weather over the past week.
FAST FOOD WORKERS-CONVENTION
CHICAGO (AP) -- Fast food workers from around the country will gather this weekend in Chicago to discuss how to escalate their campaign for higher wages and union representation.
About 1,300 workers are expected at a convention in suburban Chicago Friday and Saturday. They say they can't provide for their family on minimum wage and want paid sick days and other benefits.
Industry officials say a $15-an-hour wage would hurt jobs, and that the solution is more education and job training.
Kendall Fells is an organizing director of the national effort who works for the Service Employees International Union.
He says higher-profile protests are coming that may include civil disobedience. So far, most of the protests have included one-day strikes and a protest outside this year's McDonald's Corp. shareholder meeting.
HONG KONG-SUSPECT MEAT
HONG KONG (AP) -- McDonald's restaurants in Hong Kong have taken chicken nuggets and chicken burgers off the menu after a mainland Chinese supplier was accused of selling expired meat.
The fast food chain said late Thursday that it "suspended relevant food ingredients" at Hong Kong outlets in light of the scandal surrounding Shanghai Husi Food Co.
Chinese authorities detained five Husi employees after a TV station reported last weekend that the company repackaged and sold meat past its use-by date.
McDonald's in Hong Kong said it used chicken from a Husi factory, but it wasn't the Shanghai factory at the center of the initial allegations against the company.
The government of the semiautonomous Chinese territory said that imports of Husi products would be suspended as the investigation continued.
TOKYO (AP) -- Japan reports its inflation rate eased slightly in June as a sales tax stunted demand.
The government reported Friday that the core consumer price index, which does not include prices for fresh foods, rose 3.3 percent in June, down from the 3.4 percent in May.
But factoring out surging energy prices, such as a 10.6 percent rise in gas prices, the increase was 2.3 percent.
Excluding the direct effect of the April 1 increase in the sales tax to 8 percent from 5 percent, the inflation rate was 1.3 percent, the Bank of Japan says.
It has set a 2 percent inflation target, aiming to break Japan out of years of deflation, but forecasts that the rate will remain just above 1 percent for the foreseeable future.
BEIJING (AP) -- A government newspaper says Chinese regulators have concluded Qualcomm Inc., one of the biggest makers of chips used in mobile devices, has a monopoly.
Citing a planning agency official, the China Daily on Friday said the results of an investigation into Qualcomm will be released soon. It cited the official as saying Qualcomm "has a monopoly" but gave no indication what possible penalties or orders to change its business practices the U.S. company might face.
Chinese regulators were investigating whether Qualcomm abused its dominant market position by charging excessive fees for technology.
China's government has complained about the high cost of licenses for foreign technology used by the country's manufacturers of mobile phones, personal computers and other electronics.
BEIJING (AP) -- Baidu Inc., which operates China's most popular search engine, says its quarterly profit rose 34 percent over a year earlier as its mobile business grew.
Baidu said Friday it earned 3.5 billion yuan ($571.1 million) in the three months ended June 30. Revenue rose 58.5 percent to 11.9 billion yuan ($1.9 billion).
Baidu and other Internet companies are building mobile e-commerce and other services as Chinese users shift rapidly to going online using smartphones and tablet computers. Baidu dominates traditional Internet search but is a much smaller presence in mobile.
The contribution of mobile to Baidu's total revenue rose above 30 percent for the first time, chairman Robin Li said in a statement.
Li said, "We had a great quarter as we continued to build very strong mobile momentum."
FOSTER CITY, Calif. (AP) -- Visa says its profit climbed 11 percent in its fiscal third quarter versus a year earlier, aided by solid growth in payments volume, service revenue and transactions.
The results beat or matched Wall Street expectations, but the company reduced its earnings outlook for the year. CEO Charlie Scharf notes issues including a stronger U.S. dollar and slow growth in international transactions.
Visa is the world's largest processor of debit and credit card payments, and its results are closely watched because they can be a window into the buying habits and financial health of consumers.
Visa's transactions grew 6 percent in the April-June quarter, echoing data that show increased spending by consumers in recent months as unemployment declines.
SEATTLE (AP) -- Amazon.com has reported a deeper-than-expected second quarter loss as expenses outpaced a surge in revenue.
Amazon has long focused on spending the money it makes to grow and expand into new areas. In one of its most high-profile moves, Amazon is introducing its own smartphone, the Fire, which starts selling Friday.
The company has been heavily investing in services for its loyalty program, Prime, which costs $99 a year, and includes free two-day shipping on many items. It has added a grocery delivery services and music streaming for Prime Members as well as offering original TV shows and apps. It's also expanded Sunday deliveries and recently began offering a set-top video streaming box.
Amazon doesn't disclose how many Prime members there are but says it added more Prime members in the second quarter than it did in the second quarter last year, despite increasing the cost by $20 earlier this year.
Investors have been accepting of Amazon's thin profit and focus on revenue growth in the past. But shares fell in aftermarket trading.
MIAMI (AP) -- Federal officials have capped the amount of money scofflaws will be forced to pay if they don't buy insurance this year under the new health care law.
The caps are $2,448 per person and $12,240 for a family of five. The amount is equal to the national average annual premium for a bronze-level health plan.
The penalty for the first year starts at $95 per person and can rise to as much as 1 percent of annual income. The latest figure limits what the government can charge people using the personal income computation. The penalty is due when people file their 2014 taxes.
Conservative lawmakers and groups that are critical of the Affordable Care Act encouraged consumers to skip buying insurance, arguing it would be cheaper to pay the $95 penalty, but often failed to mention the 1 percent clause.
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