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| Jobs Data Ease Fears of Sharp Slowdown in U.S. Economy | Jobs Data Ease Fears of Sharp Slowdown in U.S. Economy |
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| The United States economy created an estimated 165,000 jobs in April, averting fears of a sharp slowdown and pushing the unemployment rate to its lowest level since the end of 2008. | |
| The latest jobs figures from the Department of Labor paint a brighter picture of the overall economy than other recent data, which had been weaker and prompted economists to warn of a spring swoon for the third year in row. Those worries had been heightened after the March jobs report, which initially showed the economy to have added just 88,000 jobs, much fewer than had been expected. | The latest jobs figures from the Department of Labor paint a brighter picture of the overall economy than other recent data, which had been weaker and prompted economists to warn of a spring swoon for the third year in row. Those worries had been heightened after the March jobs report, which initially showed the economy to have added just 88,000 jobs, much fewer than had been expected. |
| On Friday, however, the government sharply revised upward its estimates for job creation in February and March, concluding that the economy actually generated 332,000 jobs in February and 138,000 in March. The unemployment rate, which is based on a separate survey, fell by 0.1 percentage point to 7.5 percent, from 7.6 percent in March. | On Friday, however, the government sharply revised upward its estimates for job creation in February and March, concluding that the economy actually generated 332,000 jobs in February and 138,000 in March. The unemployment rate, which is based on a separate survey, fell by 0.1 percentage point to 7.5 percent, from 7.6 percent in March. |
| “It’s back to normal for this cycle,” said Steve Blitz, chief economist at ITG. “This number is back to the mainstream of what we’ve seen in this recovery.” | “It’s back to normal for this cycle,” said Steve Blitz, chief economist at ITG. “This number is back to the mainstream of what we’ve seen in this recovery.” |
| Still, Mr. Blitz said, many of the new jobs were in lower-paying sectors like retail and food services. Stores hired 29,000 workers, while the leisure and hospitality sector added 43,000 employees. Hiring for temporary positions also strengthened, as the temporary help sector gained more than 30,000 jobs. | |
| “You’re hiring people, but you’re not generating high-income jobs,” he said. “But work is work. It’s honorable.” | “You’re hiring people, but you’re not generating high-income jobs,” he said. “But work is work. It’s honorable.” |
| The stock market reacted strongly to the better-than-expected figures, with the Standard & Poor’s 500 index breaking through the 1,600-point level for the first time, rising almost 1.2 percent by late morning. The Dow Jones industrial average was up over 150 points, or just over 1 percent as well. | |
| Another positive sign was that the size of the labor force increased, while the total number of unemployed Americans dropped by 83,000 to 11,659,000. What’s more, the ranks of the long-term unemployed, defined as workers who have been out of a job for 27 weeks or more, declined especially sharply, falling by 258,000 to 4.4 million. That’s still far above what’s typical at this stage of a recovery, but it is a marked improvement from past months. The long-term unemployed have been a particular cause of concern for economists in this recovery, because skills degrade the longer a person is out of the work force, and employers are reluctant to hire someone who has not held a job in a while. | |
| The least-educated workers continue to bear the brunt of elevated joblessness, with the unemployment rate for workers who failed to graduate from high school rising to 11.6 percent from 11.1 percent in March. At the other end of the education spectrum, unemployment among people with a college degree or more remained at a low level, rising by a bare 0.1 of a percentage point to 3.9 percent. | |
| Employment in the construction sector, which increased at a healthy pace in the first three months of 2013, actually dipped by 6,000 in April. The recovering housing market has been one of the most notable bright spots in the overall economic landscape, and economists will be closely watching to see if higher home prices and increased construction translate into additional jobs in the months ahead. | |
| At 7.5 percent, overall unemployment now stands at its lowest point since December 2008, when joblessness was rising rapidly after the collapse of Lehman Brothers and the onset of the financial crisis. Unemployment ultimately peaked at 10 percent in October 2009, and there has been a steady, if frustratingly slow, decline since then. The manufacturing sector, which is closely watched as a gauge of broader economic strength, was unchanged in April. Private sector job creation totaled 176,000. | |
| Economists have been warning that the economy — and job creation — will slow in the second-quarter, largely as a result of fiscal tightening in Washington. Payroll taxes increased in January, and across-the-board spending cuts mandated by Congress went into effect in March, and their impact is expected to be felt more broadly in the months ahead. | Economists have been warning that the economy — and job creation — will slow in the second-quarter, largely as a result of fiscal tightening in Washington. Payroll taxes increased in January, and across-the-board spending cuts mandated by Congress went into effect in March, and their impact is expected to be felt more broadly in the months ahead. |
| Indeed, while the private sector has clearly been on the upswing this year, the government continues to represent a drag on job creation, shedding 11,000 jobs during the month. All in all, April’s rate of job creation, which itself is subject to major revision in the months ahead, was still well below the 209,000 jobs added per month in the fourth quarter of 2012 and the 206,000 jobs per month pace in the first quarter of 2013. | |
| “In one line: Not bad, especially in the light of beaten-down expectations,” said Ian Shepherdson, chief economist with Pantheon Macroconomic Advisors. “This could have been much worse.” | “In one line: Not bad, especially in the light of beaten-down expectations,” said Ian Shepherdson, chief economist with Pantheon Macroconomic Advisors. “This could have been much worse.” |
| The White House was quick to highlight Friday’s report, even as it warned of the potential dangers from the fiscal squeeze. | |
| “While more work remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression,” said Alan Krueger, chairman of the Council of Economic Advisers. He urged Congress to replace automatic budget cuts with a more balanced approach. “Now is not the time for Washington to impose self-inflicted wounds on the economy.” | |
| Republicans cautioned against drawing too positive a conclusion from April’s data. “President Obama’s desperate hype-and-blame campaign will try to spin today’s anemic jobs report six ways to Sunday,” said Reince Priebus, chairman of the Republican National Committee. “But the facts remain clear: too many Americans have been unemployed for far too long. For millions, the economy is simply not working.” | |
| As long as the unemployment rate remains above 6.5 percent, the Federal Reserve has promised to keep buying billions of dollars of bonds in an effort to help bolster growth. Despite the positive news Friday, few observers expect the economy to generate enough jobs in the short-term to bring unemployment down to where the Fed might scale back its stimulus efforts. | |
| Economists also noted that the number of hours worked fell in April, another sign that the economy is having trouble generating enough additional income and jobs to help lift spending. The typical workweek fell to 34.4 hours from 34.6 in March. Average hourly earnings inched up by four cents to $23.87. | |
| The government could be the wild card in the coming months. Automatic, across-the-board spending cuts officially went into effect in March, and if the mandated spending cuts continue, layoffs could increase. Apart from the job figures, the economy has been showing signs of weakness of late. Several indicators beginning in March have pointed to much slower growth, with everything from retail sales to manufacturing looking soft recently. | The government could be the wild card in the coming months. Automatic, across-the-board spending cuts officially went into effect in March, and if the mandated spending cuts continue, layoffs could increase. Apart from the job figures, the economy has been showing signs of weakness of late. Several indicators beginning in March have pointed to much slower growth, with everything from retail sales to manufacturing looking soft recently. |