U.S. unemployment rate plummets
May 2, 2014 by Christopher S. Rugaber The Associated Press
U.S. employers added a robust 288,000 jobs in April, the most in two years. This is 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 per cent, its lowest level since September 2008, from 6.7 per cent 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 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 and construction gained 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 per cent in the past 12 months, just above the annual inflation rate of 1.5 per cent.
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 to month and that during the first three months of 2014, nearly 1.3 million people had poured into the labour force.
The jump in hiring comes after a spate of other data showed that the economy is improving. Consumers are ramping up spending, businesses are ordering more goods and manufacturers are expanding. The strengthening numbers show that harsh snowstorms and frigid cold in January and February were largely to blame for the economy’s scant growth at the start of the year.
The economy barely expanded from January through March, eking out an annual growth rate of just 0.1 per cent, down from a 2.6 per cent rate in the final three months of 2013. Americans spent more last quarter on utilities and health care, but their spending on goods barely rose. Businesses also reduced spending, and exports fell.
Still, other data indicate that the economy was already rebounding in March and probably improved further in April. Consumers bought more cars and spent more at shopping malls. Overall consumer spending soared in March by the most in 4.5 years.
Spending is up partly because Americans earned a bit more, and confidence has improved from the bleak winter months. Incomes rose 0.5 per cent in March, the government said, the most since August.
And a private survey showed that manufacturing activity accelerated in April for a third straight month.
Businesses are also investing more in machinery and equipment after cutting back in those areas in January and December. Business orders for manufactured goods jumped in March, the government said last week.
All told, the positive news has led most economists to forecast a strong rebound in economic growth – to a 3.5 per cent annual rate in the current April-June quarter. And growth should reach nearly three per cent for the full year, up from 1.9 per cent in 2013, they expect.