Economy rebounds with solid job gains
But slow wage growth may prompt Fed to delay raising interest rate
WASHINGTON — Rebounding from a dismal start to the year, the economy added 223,000 jobs in April, a solid gain that suggested that employers are helping fuel a durable if still subpar recovery.
The job growth helped lower the unemployment rate to 5.4 percent from 5.5 percent in March, the Labor Department said Friday. That is the lowest rate since May 2008, six months into the recession.
The figures provided some reassurance that the economy is recovering from a harsh winter and other temporary headwinds that caused it to shrink in the first three months of the year. Yet the bounce- back appears to be falling short of hopes that growth would finally accelerate in 2015 and top 3 percent for the first time in a decade.
Most analysts foresee the economy growing about 2.5 percent this year, similar to the modest expansion typical of much of the six- year recov-
ery.
In its report Friday, the government revised its estimate of March’s job gain to 85,000 from 126,000. In the past three months, employers have added 191,000 positions, a decent total but well below last year’s average of 260,000.
“Job growth is going from great to good,” said Michael Feroli, an economist at JPMorgan Chase.
One reason the economy hasn’t accelerated faster is that overseas economic turmoil is still restraining growth. A stronger dollar, which makes U. S. goods more expensive overseas, has cut into factory production. Manufacturers barely added jobs for a second straight month. And last year’s plunge in oil prices has led drilling companies to lay off thousands of workers.
Investors breathed a sigh of relief Friday because the figures suggested an economic rebound from the January- March quarter — but one not so explosive that it would be expected to cause the Federal Reserve to raise interest rates from record lows anytime soon. The Dow Jones industrial average soared 267 points to close up 1.5 percent.
The unemployment rate is nearing the level the Fed considers healthy. Yet many other signs suggest that the job market isn’t fully recovered. The number of full- time workers, for example, fell in April while the number of part- timers jumped more than 400,000 to 27.7 million— a half- million more than a year ago.
The increase came from Americans who said they preferred parttime work, the report said. The number of part- timers who want full- time jobs declined 100,000 to 6.6 million. That’s still above prerecession levels.
Despite the jump in hiring in April, there are indications of a feast- orfamine job market, with some sectors vastly outperforming others.
Construction has been gaining steam, thanks to a reasonably healthy housing sector and a spring rebound in hiring after winter weather forced some building projects to be delayed. Builders hired 45,000 workers last month.
Similarly, the professional and business services category has been strong, adding 62,000 jobs in April, reflecting financial sector strength and continued demand for college- educated, white- collar workers. Health care added 55,600 positions, bringing the three- month total for that sector to 125,000.
But with oil prices way down from where they were a year ago, drillers and other oil patch employers have been shedding jobs.
Energy prices are rising, as are gasoline costs, but energy companies including drillers and employers in the Labor Department’s support for oil and gas operations category continued to shed workers, cutting more than 10,000 jobs in April.
The nation’s job growth still isn’t raising worker pay much. Average hourly wages rose just 3 cents in April to $ 24.87. Wages have risen only 2.2 percent over the past 12 months, roughly the same sluggish pace of the past six years.
“We’re definitely back to that same discussion we were having before March and earlier this year,” said Tara Sinclair, a professor at George Washington University and chief economist at the job listings service Indeed. “Things are looking pretty good and going in the right direction, but where is the wage growth?”
The Fed has been monitoring the job market for convincing evidence of a healthier economy. The chronically sluggish pay growth and the downward revision to March’s job gain may dissuade the Fed from raising rates in June or even by fall, economists say.