WASHINGTON (Reuters) -
U.S. employment returned to its pre-recession peak in
May with a solid pace of hiring that offered
confirmation the economy has snapped back from a winter
slump.
Nonfarm payrolls increased 217,000 last month, the Labor Department
said on Friday, in line with market expectations. Data for March and
April was revised to show 6,000 fewer jobs created than previously
reported.
"This was a very solid report with no obvious warts to detract from
the underlying message of sustained improvement in economic
activity," said Millan Mulraine, deputy chief economist at TD
Securities in New York.
May marked a fourth straight month of job gains above 200,000, a
stretch last witnessed in January 2000, even though it also was a
slowdown from the 282,000 jobs created in April, when hiring was
still bouncing back from a winter lull.
The nation finally recouped the 8.7 million jobs lost during the
recession, with 8.8 million more people working now than at the
trough in February 2010. But the working age population has since
increased 10.6 million while 12.8 million Americans have dropped out
of the labor force.
The upbeat jobs report hoisted U.S. stocks to record highs. U.S.
Treasury debt prices slipped, while the dollar was little changed
against a basket of currencies.
ECONOMY GAINING TRACTION
The pace of hiring adds to data from automobile sales to services
and factory sector activity that have suggested the economy will
grow at a pace of more than 3.0 percent this quarter after shrinking
at a 1.0 percent rate in the first three months of the year.
Other data on Friday showed consumer credit in April recorded its
largest advance since November 2001, a sign households were feeling
more secure in taking on debt.
Last month, the unemployment rate held steady at a 5-1/2 year low of
6.3 percent as some Americans who had given up the search for work
resumed the hunt.
A measure of underemployment fell to its lowest level since October
2008. The gauge, which includes people who want a job but have given
up searching and those working part-time because they cannot find
full-time jobs, fell to 12.2 percent.
Economists expect more previously discouraged workers to re-enter
the labor force over the course of the year. While that would be a
sign of confidence in the labor market, it could slow the decline in
the jobless rate.
The long-term unemployed accounted for 34.6 percent of the 9.8
million jobless Americans, down from 35.3 percent in April. The
median duration of unemployment fell to 14.6 weeks, the shortest
stretch in five years and a sharp drop from April.
"We are making progress, but we still have a very long way to go,"
said Ryan Sweet, a senior economist at Moody’s Analytics in West
Chester, Pennsylvania.
The return of discouraged job seekers and drop in long-term
unemployment will be welcomed by the Federal Reserve, which has
cited low labor force participation as one of the reasons for
maintaining an extraordinarily easy monetary policy.
The workforce, which had declined sharply in April, increased by
192,000 people last month. That left the labor force participation
rate, or the share of working-age Americans who are employed or at
least looking for a job, at 62.8 percent.
Average hourly earnings, which are being closely watched for signs
of wage pressures that could signal dwindling slack in the labor
market, rose five cents, or 0.2 percent. On a year-over-year basis,
earnings were up a tepid 2.1 percent, suggesting little build-up in
wage inflation.
But earnings in some sectors, such as mining and information
services, are rising at a much faster clip.
"It's a difficult time for Fed policymakers," said Peter Molloy,
president at Edison Investment Research in New York. He said the
central bank normally would be raising interest rates by now given
the level of the jobless rate but wanted to go slowly because the
recovery has been weak by historic norms.
The Fed has kept benchmark overnight rates pegged near zero since
late 2008 and is not expected to begin nudging them up until well
into next year.
Employment gains in May were broad-based.
Manufacturing payrolls increased by 10,000, expanding for the 10th
straight month. Further increases are expected as auto sales outpace
inventories.
Construction payrolls rose by 6,000. It was the fifth consecutive
month of gains, but the pace is slowing as the housing sector
struggles to regain momentum.
There were sturdy job gains in leisure and hospitality, and
professional and businesses services. Healthcare added 33,600
workers, likely boosted by the implementation of the Affordable Care
Act. Government payrolls increased 1,000, a fourth straight monthly
increase. Retail employment also rose.
The length of the workweek held steady at 34.5 hours, with a measure
of total work effort rising by 0.2 percent.
(Reporting by Lucia Mutikani; Additional reporting by Jason Lange in
Washington; Editing by Andrea Ricci, Tim Ahmann and Chizu Nomiyama)
