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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 March 07, 2014 18:27 GMT
WASHINGTON (AP) -- U.S. hiring improved in February from the previous two months despite a blast of wintry weather, likely renewing hopes that growth will accelerate this year.
The Labor Department says employers added 175,000 jobs last month, up from just 129,000 in January, which was revised up from 113,000.
The unemployment rate rose to 6.7 percent from a five-year low 6.6 percent. More Americans started looking for work but didn't find jobs. That's still an encouraging sign because more job hunters suggest that people were more optimistic about their prospects.
The figures were a welcome surprise after recent economic reports showed that harsh weather closed factories, lowered auto sales, and caused existing-home sales to plummet.
WASHINGTON (AP) -- The U.S. trade deficit widened slightly in January as a rise in imports of oil and other foreign goods offset a solid increase in exports.
The Commerce Department says the trade deficit increased to $39.1 billion, up 0.3 percent from December's revised $39 billion deficit.
Exports climbed 0.6 percent to $192.8 billion, led by increased sales of U.S.-made machinery, aircraft and medical equipment. Imports also rose 0.6 percent to $231.6 billion, reflecting a 9 percent jump in imports of petroleum. Imports of food and machinery also rose.
The trade deficit is the difference between imports and exports. A higher trade deficit acts as a drag on economic growth because it means U.S. companies are making less overseas then their foreign competitors are earning in U.S. sales.
PORTLAND, Maine (AP) -- L.L. Bean says it had a record year for profits and saw revenue growth of 3 percent.
CEO Chris McCormick told workers on Friday that after four consecutive years of growth, the Maine-based retailer is ready to accelerate expansion plans. He says the privately held company plans its largest single-year capital investment and will spend an additional $100 million on website changes, retail expansion and business systems.
The company's performance beat the industry average.
L.L. Bean's board was happy enough with the revenue gain to authorize an 8 percent bonus for full-time workers. That's the biggest bonus since 2005.
In a memo to Bean's 5,100 full- and part-time workers, McCormick said the company has been conservative for the past few years and is now ready to "grab market share."
NEW YORK (AP) -- Shares of Coupons.com are close to doubling in their first day of trading on the New York Stock Exchange.
The stock gained $14.40, or 90 percent, to $30.40 in morning trading.
Coupons.com Inc. delivers digital coupons and coupon codes to consumers. It priced its initial public offering of 10.5 million shares at $16 per share. The company had initially expected to offer 10 million shares and expected them to be priced between $12 and $14 per share.
The Mountain View, Calif., company raised $168 million from the IPO.
Coupons.com had 2013 revenue of $167.9 million, up from $112.1 million in the prior year.
The stock is trading under the "COUP" ticker symbol.
CHILD SEAT RECALL
DETROIT (AP) -- The federal government is ordering child seat maker Graco to explain why it didn't include 1.8 million infant seats in a recall for faulty buckles.
The National Highway Traffic Safety Administration says Graco has until March 20 to explain why last month's recall of 3.8 million child seats didn't include infant seats, which have the same buckles that can get stuck on the child seats.
Graco has said the child seat buckles get stuck because children drop food or drinks on them. It is sending replacement buckles to owners for free. It will also send replacement buckles for infant seats if owners request them.
NHTSA says Graco will face fines of $7,000 per day if its response is late or incomplete.
Graco said Friday it will comply with the request for an explanation.
TRENTON, N.J. (AP) -- A federal audit finds New Jersey did nothing wrong when it used a no-bid contract to hire a firm to clean up debris left behind by Superstorm Sandy in 2012.
But the U.S. Homeland Security Department says that towns that continued to use the firm for more than 60 days without putting the work out to bid might not be fully reimbursed by the federal government.
The contract and the firm, Deerfield Beach, Fla.-based AshBritt, drew the ire of lawmakers months after Sandy struck. That marked the first major political debate over how Gov. Chris Christie's administration responded to Sandy.
The audit was made public Thursday by Christie's office.
Christie's office criticized Democrats and the media for treating the contract as a scandal.
MIAMI (AP) -- A former law partner of convicted Ponzi schemer Scott Rothstein has been charged with conspiring to violate federal campaign contribution laws.
Court records show charges were filed Friday against Russell Adler, who was a principal in the now-defunct Fort Lauderdale law firm Rothstein Rosenfeldt Adler. The firm was liquidated after Rothstein's $1.2 billion Ponzi scheme was exposed in fall 2009.
Adler is charged with helping orchestrate thousands of dollars in bundled contributions from the firm's employees and attorneys to John McCain's 2008 campaign for president and Charlie Crist's run for the U.S. Senate. The contributions were illegally reimbursed by the law firm.
There is no indication that McCain or Crist knew of the illegal scheme. Adler has consistently denied wrongdoing.
Rothstein is serving a 50-year prison sentence.
Company confirms feds investigate visa use
An international tech consulting firm confirms the federal government is investigating its use of U.S. work visas.
A Mu Sigma spokeswoman told The Associated Press authorities asked the company to provide information related to its visas, and the company is cooperating fully.
Privately held Mu Sigma is headquartered in Illinois. CEO Dhiraj Rajaram also runs the company from offices in India.
Federal records show the company has brought in nearly 150 H-1B temporary workers since 2009. The Justice Department did not immediately respond to requests for comments.
The company declined to clarify whether the investigation is targeting H-1B or business visas.
Last year, tech giant Infosys settled a federal case for $34 million over allegations it used business visas to bring in temporary workers hired out for consulting work.
NEW YORK (AP) -- Coca-Cola CEO Muhtar Kent's pay fell 16 percent last year because his performance-based bonus took a hit.
Muhtar Kent's pay package was worth $18.2 million for 2013, according to a regulatory filing made with the Securities and Exchange Commission on Friday. That's down from the $21.6 million he earned the previous year.
The decline was primarily the result of a lower performance-based bonus, which fell to $2.2 million, from $6 million the previous year. That was the result of lower sales volume growth of just 2 percent for the year, compared with 4 percent the previous year.
A new cap was also put into place for the bonus, based on feedback from shareholders.
The AP's calculation counts salary, bonuses, perks, stock and options awarded to the executive during the year.
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