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Strong Job Report Shows US Economy Gaining Steam

Friday, 06 May 2011 04:13 By Christine Hauser, The New York Times News Service | Report
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The United States economy added far more jobs than expected in April as the recovery continued to pick up steam.

The Department of Labor said Friday that 244,000 jobs were added last month after a gain of a revised 221,000 in March. The unemployment rate rose to 9 percent in April from 8.8 percent in March.

As has been the case for several months, all of the increase came from private employers, which added another 268,000 jobs last month on top of the revised 231,000 in March, the monthly report said. Results of the previous two months were revised to show an additional 46,000 jobs were added.

Governments, struggling to balance budgets as they deal with shrinking revenues and growing deficits, cut 24,000 jobs last month. Most of the drop came at the local level, where 14,000 jobs were lost in April after a decline of 15,000 in March.

Economists said the report was generally good news.

“There seems to be more underlying momentum there than certainly had been feared going into the report,” said Nigel Gault,  the chief United States economist for IHS Global Insight. “We do seem to be moving into the stage of the business cycle where we get self-reinforcing improvements in employee and consumer spending.”

But he and other economists said that there were offsetting factors, like falling government employment numbers, weak construction figures, no expansion in average weekly hours, and a small rise in average hourly earnings.

“This is simply not good enough to support consumption on a secular basis, and while we keep waiting for income gains to following payroll growth, such gains have yet to materialize in any significant manner,” Dan Greenhaus, the chief economic strategist for Miller Tabak & Company, said in a research note.

Still, April’s numbers exceeded the forecasts of analysts, who had expected a gain of 185,000 jobs over all, with the change in private payrolls of 200,000. The uptick in the unemployment rate that came even as employers were adding jobs was an indication that more people were entering the work force as hopes for hiring increased.

The monthly jobs report is a crucial snapshot of the economy as it tries to move from recovery to expansion, and the April figures covered a period when several indicators pointed to signs of weakness. The American economy grew at a tepid 1.8 percent in the first quarter, according to the government’s estimate for the first quarter. Personal consumption has slowed and construction remains weak, though winter weather was cited as a reason.

Turmoil in the Middle East and North Africa has sent crude oil prices higher, pushing up the cost of gasoline, which in turn has taken a larger share of the money consumers have to spend. Supply disruptions in the aftermath of the earthquake and tsunami in Japan have rippled through American industries, especially the automobile sector where plants have reduced production and idled workers.

Those auto plant shutdowns were one factor cited when the government reported Thursday that the weekly initial jobless claims rose to 474,000 last week, up from 431,000 the week before.

While better than expected, Friday’s numbers still offered a few cautionary signs that the national economy had a long way to go. Though down from its peak of 10.1 percent in late 2009, April’s unemployment rate reflects only those Americans who are still actively looking for work.

And while any job creation is a positive, last month’s growth was barely enough to absorb people entering the work force in the United States, much less to quickly shrink the unemployment rolls.

“Without acceleration in job growth, the economy is unlikely to achieve the sustainable growth trajectory that is typical of an economy that is supposedly in its second year of recovery and technically has transitioned into expansion,” said Steven Ricchiuto, the chief economist for Mizuho Securities USA.

About 13.7 million people were out of work in April, among them 5.8 million people who have been jobless for six months or longer. In March, the number of people who were unemployed was 13.5 million, with 6.1 million of them considered the long-term unemployed. In April, about 64.2 percent of adults were either in the work force or looking for a job, the fourth consecutive month it has been at that level, which is the lowest labor participation rate in a quarter-century.

The Labor Department’s report on Friday showed that most of the increases in nonfarm jobs came in retail trade, while jobs in services , health care, and leisure and hospitality also grew. An additional 29,000 manufacturing jobs were added in April, compared with 17,000 in March. Analysts had forecast a rise of 20,000 manufacturing jobs in April.

The average workweek was 34.3 hours in April, the same as in March, while average hourly earnings rose by 3 cents to $22.95, compared with a revised $22.92 in March.

The outlook for the near-term job growth remains murky.

The housing downturn, high oil and commodity prices, government austerity measures and limited consumer spending will prevent gross domestic product growth from being more robust, and unemployment is likely to remain above 8 percent through 2012, according to Gad Levanon, associate director of macroeconomic research at the Conference Board.

Still, in previews of the national jobs report, some economists noted that some aspects of the economy had been promising — most corporate earnings have been strong, industrial production has risen, and retail sales increased 8.9 percent on average in April, one of the biggest increases in the last few years.

“Longer-term prospects are more promising, however,” Mr. Levanon said in a statement before Friday’s release. “In the last six months, employment outside of construction, finance and state and local government has already been growing faster than nearly any other six-month period in the last decade. Once constraints in these hard-hit sectors loosen, overall job recovery is likely to pick up pace.”


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