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.
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Last Update on August 31, 2015 07:33 GMT
ECONOMY-THE DAY AHEAD
WASHINGTON (AP) --There are no major economic reports scheduled for release today. But tomorrow, the Institute for Supply Management will issue its manufacturing index for August and the Commerce Department will report on construction spending for July.
Also tomorrow, automakers will release vehicle sales for August.
On Wednesday, the Labor Department will reveal second-quarter productivity data and the Commerce Department will report on factory orders for July. The Federal Reserve will also release its Beige Book.
SENECA FALLS, N.Y. (AP) -- U.S. Treasurer Rosie Rios plans to travel to the National Women's Hall of Fame in upstate New York later today to hear from the public about plans to put a woman on the $10 bill.
Rios is scheduled to be at a town hall meeting in Seneca Falls, where the original 1848 Women's Rights Convention was held.
Treasury Secretary Jacob Lew announced in June that the $10 bill would be redesigned, with the portrait of Alexander Hamilton replaced with a woman. Lew says the agency has so far gotten more than a million responses to his request for comments.
Officials plan to make a decision by this fall, with the total redesign completed by 2020, the 100th anniversary of the passage of the 19th Amendment giving women the right to vote.
UNDATED (AP) -- Billionaire investor Warren Buffett's company has amassed a stake worth nearly $4.5 billion in Phillips 66 more than a year after trading a chunk of its holding in the oil refiner for a chemical business investment.
A regulatory filing says Berkshire Hathaway Inc. has accumulated about 58 million shares, which amounts to more than 10 percent of the Houston company's stock.
In late 2013, the Omaha, Nebraska, company agreed to trade about $1.4 billion of its Phillips 66 stock for one of the refiner's businesses that makes additives to help crude oil flow through pipelines.
Many investors watch Berkshire Hathaway filings closely because they like to copy Buffett's moves given his successful record.
ROME (AP) -- An Italian energy company Eni says it has discovered a "supergiant" natural gas field off Egypt.
The company, Eni, says it's the largest ever found in the Mediterranean Sea.
The discovery well is about 120 miles from the Egyptian coast, at a depth of nearly 4,800 feet.
Eni says after full development, the discovery will be able to ensure satisfying Egypt's natural gas demands "for decades."
GENERAL MILLS-CLIMATE CHANGE
GOLDEN VALLEY, Minn. (AP) -- General Mills says it's eager to do its part to fight climate change, so it's setting a goal of cutting greenhouse gas emissions by 28 percent over the next decade -- from farm to fork to landfill.
The giant food company outlined its plans to The Associated Press ahead of an official announcement today.
General Mills says it will invest more than $100 million in energy efficiency and clean energy in its own operations. But its plan appears to stand apart from other companies' efforts by getting its suppliers and consumers into the act.
Those suppliers will be encouraged to do things like engage in more sustainable agriculture.
CEO Ken Powell says the company is acting because climate volatility will ultimately be bad for its business.
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