US gains 288,000 jobs, most in 2 years
May 3, 2014, 12:02 am TWN
WASHINGTON/LONDON -- U.S. employers added a robust 288,000 jobs in April, the most in two years, the strongest evidence to date that the economy is picking up after a brutal winter slowed growth.
The Labor Department also said Friday that the unemployment rate sank to 6.3 percent, its lowest level since September 2008, from 6.7 percent in March. But the drop occurred because the number of people working or seeking work fell sharply. People aren't counted as unemployed if they're not looking for a job.
In addition to the burst of hiring in April, employers added more jobs in February and March than previously estimated. The job totals for those two months were revised up by a combined 36,000.
Employers have now added an average of 238,000 jobs the past three months, up from 167,000 in the previous three.
"Not only is job growth continuing, but it is accelerating," said Patrick O'Keefe, director of economic research at the accounting and consulting firm CohnReznick.
Sal Guatieri, an economist at BMO Capital Markets, said the surge in hiring "signals that American companies are optimistic the economy will snap back smartly after the largely weather-related slump in the first quarter."
Hiring last month was broad-based and included higher-paying jobs: Manufacturing gained 12,000, construction 32,000. Professional and technical services, which include accounting and engineering positions, added 25,100 jobs. The number of government jobs grew 15,000, mostly at the local level.
One sour note: Average hourly pay was unchanged at $24.31. Average wages have risen just 1.9 percent in the past 12 months, just above the annual inflation rate of 1.5 percent.
The fall in the unemployment rate was due mainly to the exodus of people who stopped looking for work. O'Keefe said he was surprised by the 806,000 drop in the number of Americans either with a job or seeking one. But he noted that that figure is volatile from month and month and that during the first three months of 2014, nearly 1.3 million people had poured into the labor force.
Investors responded to the surprisingly strong job growth by selling bonds, a sign that they think the economy is picking up. Prices of U.S. Treasurys fell, sending yields higher. The yield on the 10-year Treasury note, a benchmark for many loans including mortgages, rose to 2.67 percent from 2.62 percent shortly before the jobs report was issued.
"Not only did the headline beat expectations by a mile, but there were also upward revisions to the prior 2 months, and the unemployment rate unexpectedly plunged to a fresh post-crisis low," said Michael Woolfolk, an analyst at Bank of New York Mellon.
Analysts said the figures more than justified the decision by the Fed earlier this week to continue to reduce its stimulus in the wake of much lower than anticipated first quarter growth following bad weather across large parts of the country.
As a result, investors concluded that the jobs data, though encouraging on the growth front, would mean that the so-called "tapering" will continue.
In Europe, the FTSE 100 index of leading British shares was up 0.2 percent at 6,824 while the CAC-40 in France fell 0.4 percent to 4,468. Germany's DAX fell 0.2 percent to 9,582.
In the U.S., the Dow Jones industrial average was up 0.1 percent at 16,579 while the broader S&P 500 index rose 0.2 percent to 1,887.