- Freezing rain
The U.S. economy showed in April that it's healthier than many had feared, adding a solid 165,000 jobs and driving the unemployment rate down a notch to a four-year low of 7.5 percent.
Not only that, but many more people were hired in February and March than previously thought, the Labor Department said Friday.
The job gains came despite a global slowdown, Social Security tax increases and federal spending cuts that some had feared would be a drag on the economy.
The stock market soared on the news, with the Dow closing up 142 points, or nearly 1 percent, after briefly breaking 15,000 for the first time in history.
Coming after a poor jobs report for March, the figures helped ease fears that U.S. hiring might be slumping this spring for a fourth straight year.
"All things considered, 165,000 isn't the biggest monthly gain in payrolls you'll ever see, but it's enough to assuage concerns that the economy had stalled again," said Paul Ashworth, an economist at Capital Economics.
The Labor Department revised upward its estimate of job gains in February and March by a combined 114,000. It now says employers added 332,000 jobs in February and 138,000 in March.
The economy has created an average of 208,000 jobs a month from November through April -- well above the monthly average of 138,000 for the previous six months.
The job market is benefiting from a resurgent housing market, rising consumer confidence and the Federal Reserve's stimulus actions, which have helped lower borrowing costs and lift the stock market.
The unemployment rate edged down from 7.6 percent in March and has fallen 0.4 percentage point since the start of the year, though it remains high. The Fed has said it plans to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent.
One cautionary note in the employment report: Most of the biggest job gains were in lower-paying fields, such as hotels and restaurants, which added 45,000 jobs, and retail, which added 29,000. Temporary-help firms gained 31,000 positions.
By contrast, construction companies and governments cut jobs. Manufacturing employment was flat.
Some higher-paying sectors added workers. Professional and technical services, which include accounting, engineering and architecture, added 23,000 jobs. Education and health services gained 44,000.
Average hourly pay rose, but the average workweek for private-sector employees dipped 0.2 hour to 34.4 hours. That meant average weekly paychecks declined.
But over the past year, total pay after adjusting for inflation is up a healthy 2.1 percent, economists said. That should help boost consumer spending in coming months.
The job growth is occurring while the U.S. economy is growing modestly but steadily. It grew at a 2.5 percent annual rate in the January-March quarter, fueled by the strongest consumer spending in two years.
The housing recovery is helping drive more hiring. Rising home sales and construction create jobs and increase spending on furniture, landscaping and other services.
One company that has benefited is SolarCity, based in San Mateo, Calif. Rising home building has helped increase demand for the solar-power systems the company installs in homes and businesses.
CEO Lyndon Rive said SolarCity added 177 jobs in April and will welcome its 3,000th employee Monday. It is hiring engineers, installers and administrative support staff and still has 400 openings.
Consumers have been spending more even though their take-home pay was shrunk this year by a Social Security tax increase. On top of that, the economy has been under pressure from the across-the-board government spending cuts that began taking effect March 1. And some small and midsize companies are concerned about new requirements under the federal health care law.
Americans' confidence in the economy jumped last month, lifted by a brighter outlook for hiring and expectations for higher pay, according to the Conference Board, a research group. Cheaper gasoline, the booming stock market and rising home values are also no doubt making people more confident.
Home prices rose 9.3 percent in February compared with a year ago, the most in nearly seven years, according to the Standard & Poor's/Case-Shiller 20-city index.
Still, prices nationwide remain about 30 percent below their peak during the housing bubble in 2006. They're back only to where they were in 2003.
Yet the global economy, by contrast, is slowing. The European Union warned Friday, for example, that the 17 countries that use the euro will shrink by a collective 0.4 percent this year. And unemployment in the eurozone is expected to hit an average of 12.2 percent. In Greece and Spain, it is forecast to reach 27 percent.
In April, more Americans said they had part-time jobs even though they wanted full-time work. That figure rose 278,000 to 7.9 million, reversing a steep drop the previous month.
worry that restaurants, retailers and other companies are hiring more part-timers in preparation for the start of health care reform. Companies with more than 50 full-time employees in 2013 will be required to provide health insurance to their full-time staff next year.
The revisions to the March and February figures were unusually large. Retailers, restaurants and hotels added 48,000 more jobs in February than previously reported. They accounted for three-quarters of that month's revision.
The government revises each month's job totals twice in the following two months. The revisions occur because many companies in the survey submit their responses late.
Friday's report said the number of people who have been unemployed for more than six months dropped 258,000 to 4.4 million. Over the past year, the number of long-term unemployed has declined by 687,000.
Some analysts cautioned that April's job gains don't necessarily point to faster hiring ahead.
"There is little sign in these data to suggest that a marked acceleration in monthly job creation in the months ahead is in the cards," said Scott Anderson, chief economist at Bank of the West.
A big gain in the job market is lifting the stock market to a record high.
The Dow Jones industrial average crossed 15,000 for the first time, and the Standard and Poor's 500 index, a broader market measure, rose above 1,600.
In the first hour of trading Friday, the Dow Jones industrial average jumped 173 points to 15,004, a gain of 1.2 percent.
The S&P 500 index surged 20 points, or 1.3 percent, to 1,618. It has been 13 years since the broad stock-market index broke through 1,500.
The government said U.S. employers added 165,000 jobs in April, more than economists were expecting. It also said more jobs were created in February and March than it had estimated earlier.
The unemployment rate also fell to 7.5 percent, the lowest in four years, from 7.6 percent the month before.
The Labor Department report showed the job market is improving despite higher taxes and government spending cuts.
In addition to the April gains, the government said employers added 138,000 jobs in March and 332,000 in February. That's 114,000 more over the two months.
The economy has created an average of 208,000 jobs a month from November through April. That's above the 138,000 added in the previous six months.
A fire overnight at the Labor Department's headquarters shut down the building for most employees. Members of the media were allowed in for the release of the report.
Economic figures in recent days have been mixed. The government said Thursday that the number of Americans applying for unemployment aid fell last week to a seasonally adjusted 324,000 - the fewest since January 2008.
Unemployment applications reflect the pace of layoffs: A steady drop means companies are shedding fewer workers. Eventually, they'll need to hire to meet customer demand or to replace workers who quit.
At the same time, surveys have shown that hiring by private companies was weak and that manufacturing activity declined in April. And exports fell in March.
The economy grew in the January-March quarter at an annual pace of 2.5 percent, much better than in the previous quarter. Economists worry, though, that federal spending cuts and higher Social Security taxes could hurt the economy. And new requirements under the federal health care law may be causing some small and midsize companies to hold back on hiring.
Analysts forecast that growth will slow in the current quarter to 2 percent or less. That could mean that job growth will remain sluggish at least through summer.
Economists at Bank of America Merrill Lynch forecast that the spending cuts could reduce April's job gains by 25,000. That figure would include layoffs by government agencies and defense contractors.
The higher Social Security tax has cut take-home pay for nearly all working Americans. It's reduced pay for a typical household earning $50,000 by about $1,000 this year. A household with two highly paid workers has up to $4,500 less.
Consumers, so far, have shown resilience despite the tax increase. Americans boosted their spending from January through March at the fastest pace in more than two years.
But their spending slowed toward the end of the first quarter. And in March, consumers cut back their spending at retail stores by the most in nine months. Most economists think consumer spending is slowing further in the current quarter.
Still, some reports suggest that hiring could pick up later in the year. Applications for unemployment benefits fell to a five-year low last week, signaling fewer layoffs and potentially more job gains.
Americans are buying cars at a healthy pace, prompting some automakers to add jobs. Auto sales rose 8.5 percent in April compared with a year ago to nearly 1.3 million - the best April total since before the recession began.
Home prices are rising, a trend that makes homeowners feel wealthier and more likely to spend. Higher
home prices are also encouraging some people to buy homes before prices rise further.
Cheaper gas could also get people spending more. The national average for a gallon of regular on Wednesday was $3.52, 11 cents less than a month ago and 28 cents below the year-ago level.
Consumer confidence rose in April. The outlook improved mostly because Americans expect the economy to deliver more jobs and higher pay in the next six months.
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