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The US jobs machine gears up

By Mark Hamrick · Bankrate.com
Friday, May 2, 2014
Posted: 11 am ET

For the many Americans who doubted winter would ever end, the April jobs report brings something akin to a hiring heat wave.

The Labor Department says 288,000 jobs were added to payrolls last month, substantially more than forecast. The nation's unemployment rate plunged to 6.3 percent -- the lowest level since September 2008.

Who's hiring?

The sectors adding jobs in April included:

  • Professional and business services: 75,000.
  • Retail trade: 35,000.
  • Construction:  32,000.
  • Health care: 19,000

The report raises hopes for a good bounce back this spring.

In recent days, the government told us that growth in the overall economy during the first quarter was essentially flat. Then, new figures on construction spending led economists to believe that the gross domestic product may have contracted during the first three months of the year. But now, many are looking for growth of 3 percent or more in the current quarter.

"Harsh winter weather deferred, delayed and displaced but did not destroy economic activity in the aggregate," Mesirow Financial chief economist Diane Swonk writes in her blog.

Fed had it right?

The Federal Reserve affirmed at its most recent meeting that it would continue to reduce the asset purchases it was using to stimulate the economy, noting that much of the economic soft patch during the winter was because of weather-induced factors. Fed policymakers also said it's likely interest rates will remain low "for a considerable time after the asset purchase program ends."

The central bank's drumbeat of asset purchase reductions has seemed odd in the face of the winter slowdown. But the stronger-than-expected employment data suggest the Fed had it right.

A few negative notes

But the jobs report isn't all good news, as the number of Americans looking for work declined. Labor force participation fell 0.4 percent to 62.8 percent.

"One out of 6 men between the ages of 25 and 54 are without jobs, and many have given up looking for work and are not counted in the jobless rate, " says Peter Morici, an economics professor at the University of Maryland's Robert H. Smith School of Business.

And while the approximately 1.6 million college graduates in the Class of 2014 are seeing more upbeat employment prospects, stresses persist for the 9.8 million people still unemployed in April, as well as those who are underemployed or making less money than they reasonably expect.

Income gains remain lackluster: The government says average hourly earnings have risen just 1.9 percent over the past 12 months.

Follow me on Twitter: @Hamrickisms.


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