The Canadian Press - ONLINE EDITION

US unemployment rate plummets to 6.3 per cent, lowest in 5 1/2 years; economy gains 288,000 jobs

  • Print

WASHINGTON - 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 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.

Many of those who stopped looking for work last month had been among the long-term unemployed — people out of work for six months or more. The number of long-term unemployed fell 300,000, the sharpest drop in 2 1/2 years, to 3.5 million. Economists said most of them likely gave up looking for work rather than found jobs.

Yet the vigorous job growth in April provided confirmation that the U.S. economy is regaining its health after nearly stalling early this year, when a harsh winter nearly stalled growth. In addition to last month's burst of hiring, 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.

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 per cent in the past 12 months, just above the annual inflation rate of 1.5 per cent. In a healthy economy, wages grow at roughly a 3 per cent to 4 per cent pace.

The fall in the unemployment rate occurred because far fewer people than normal began looking for work last month. That lowered the number of people with jobs or looking for one by 806,000.

But Patrick O'Keefe, director of economic research at the consulting firm CohnReznick, noted that that figure tends to fluctuate sharply from month to month: The exodus of job-seekers in April came after nearly 1.3 million people had begun working or looking for work in the first three months of the year.

Diane Swonk, an economist at Mesirow Financial, noted that the expiration of extended unemployment benefits at the end of 2013 likely fueled last month's drop in the number of long-term unemployed. That's because people are required to look for work to receive unemployment benefits. Once their benefits expired, many frustrated job-seekers likely stopped looking.

April's solid job growth wasn't enough to boost stock prices. The Dow Jones industrial average fell nearly 23 points in mid-day trading.

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 1/2 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 3 per cent for the full year, up from 1.9 per cent in 2013, they expect.

___

Follow Chris Rugaber at http://Twitter.com/ChrisRugaber

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Keri Latimer looks for beauty in the dark and the spaces between the notes

View more like this

Photo Store Gallery

  • A Great Horned Owl that was caught up in some soccer nets in Shamrock Park in Southdale on November 16th was rehabilitated and returned to the the city park behind Shamrock School and released this afternoon. Sequence of the release. December 4, 2012  BORIS MINKEVICH / WINNIPEG FREE PRESS
  • MIKE.DEAL@FREEPRESS.MB.CA 110621 - Tuesday, June 21, 2011 -  Doug Chorney, president Keystone Agricultural Producers flight over South Western Manitoba to check on the condition of farming fields. MIKE DEAL / WINNIPEG FREE PRESS
my2011poy

View More Gallery Photos

Poll

Do you like Gord Steeves’ idea to sell four city-owned golf courses to fund road renewal?

View Results

View Related Story

Ads by Google