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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 April 16, 2014 17:29 GMT
WASHINGTON (AP) -- U.S. factories continue to boost production.
The Federal Reserve says factory output rose 0.5 percent in March after a revised 1.4 percent surge in February. Manufacturing output has climbed a solid 2.8 percent over the past 12 months. Manufacturers produced more furniture, clothing, chemicals and aerospace products.
Higher factory output is a sign of greater demand by businesses and consumers. The gains over the past two months point to a rebound after a winter slowdown in January and December stalled growth across the economy.
Overall industrial production, which includes manufacturing, mining and utilities, rose 0.7 percent in March. In February, industrial production had expanded 1.2 percent.
WASHINGTON (AP) -- Home builders are picking up the pace after a frigid winter slowed work.
The Commerce Department says builders broke ground on 946,000 homes at a seasonally adjusted annual rate in March. That's a 2.8 percent increase from February and the highest level in three months.
Construction of single-family homes rose 6 percent, more than offsetting a 3.1 percent drop in the construction of apartments, condominiums and town houses.
At the same time, however, applications for building permits slid, clouding the outlook for future construction.
As the weather moderated, construction rose more than 30 percent in the Northeast and 65 percent in the Midwest. But it fell in the South and West.
Applications for building permits, a gauge of future activity, fell 2.4 percent to a seasonally adjusted annual rate of 990,000.
EARNS-BANK OF AMERICA
CHARLOTTE, N.C. (AP) -- Bank of America says it swung to a loss in the first quarter, hurt by $6 billion in legal expenses.
The Charlotte, N.C., bank reports a loss applicable to common shareholders of $514 million. That's compares with earnings of $1.11 billion a year earlier.
The loss amounts to 5 cents a share. A year earlier, the bank earned 10 cents a share.
Revenue totaled $22.66 billion after stripping out an accounting change. That was down 3.8 percent from last year.
The $6 billion legal expense stems from a previously announced settlement with the Federal Housing Finance Agency, and additional reserves for other mortgage-related matters.
The bank also says it reached a settlement with the Financial Guaranty Insurance Company, as well as separate settlements with The Bank of New York Mellon, over residential mortgage-backed securities.
OMAHA, Neb. (AP) -- CSX railroad expects to deliver modest profit growth this year, but the impact of the severe winter will linger into the second quarter.
Officials with the railroad said on a conference call today that the improving economy and stronger domestic utility demand for coal will boost CSX's earnings in the second half of this year and in 2015.
The Jacksonville, Fla.-based railroad had said Tuesday that the harsh winter disrupted shipments and contributed to a 14 percent drop in its first-quarter profit even as it hauled 3 percent more freight. CSX estimates the snow and cold cost it 8 to 9 cents per share in lost revenue and increased expenses.
MOSCOW (AP) -- Russia's economy minister says growth slowed to 0.8 percent in the first quarter due to uncertainty over the crisis in Ukraine.
Alexei Ulyukayev told parliament today that the country's economic situation has worsened because of "the acute international situation of the past two months," as well as "serious capital flight." More capital left the country in the first three months of 2014 than in all of 2013.
The growth figure fell far short of the ministry's earlier prediction of 2.5 percent.
Russian markets have been rattled by tensions between Moscow and neighboring Ukraine, where Russia annexed the Black Sea region of Crimea in March. Ukraine has accused Russia of supporting armed militants in the country's east, where pro-Russian activists have seized government buildings and police stations.
TOKYO (AP) -- The Mt. Gox bitcoin exchange in Tokyo is headed for liquidation after a court rejected its bankruptcy protection application.
Mt. Gox says the Tokyo District Court decided the company would not be able to resurrect itself under a business rehabilitation process filed for in February.
An administrator will try to sell the company's assets, and many creditors, including those who had bitcoins with the exchange, are unlikely to get any money back.
After Mt. Gox went offline in February, its CEO (Mark Karpeles) said 850,000 bitcoins worth several hundred million dollars were unaccounted for, blaming a weakness in the exchange's systems. Mt. Gox later changed the estimate for the lost virtual currency to 650,000, although the exact amount is still under investigation.
Bitcoins were created in 2009 as a way to make transactions across borders without third parties such as banks.
DETROIT (AP) -- Pressure is building for Michigan lawmakers to commit $350 million to Detroit pensions after the bankrupt city reached tentative agreements with pension funds and a retiree group.
The deals are tied to Detroit getting money from the state over 20 years, along with $466 million in private money, all to shore up pensions.
Retired police and firefighters would see smaller cost-of-living payments. Other city retirees would see a 4.5 percent pension cut. The $816 million vanishes if retirees don't vote in favor in the weeks ahead.
Republican House Speaker Jase Bolger says the deals are important, but he tells The Associated Press that persuading lawmakers to approve the money soon is difficult because of anti-Detroit sentiment in the Legislature.
Republicans control the House and Senate.
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