WASHINGTON (AP) — U.S. employers added 217,000 jobs in
May, a substantial gain for a fourth straight month, fueling hopes that
the economy will accelerate after a grim start to the year.
Monthly
job growth has now averaged 234,000 for the past three months, up
sharply from 150,000 in the previous three. The unemployment rate, which
is calculated from a separate survey, remained 6.3 percent in May. That
is the lowest rate in more than five years.
The report Friday
from the Labor Department signaled that the U.S. economy is steadily
strengthening and outpacing struggling countries in Europe and Asia.
U.S. consumers are showing more confidence. Auto sales have surged.
Manufacturers are expanding steadily. Service companies are growing more
quickly.
"I don’t think we have a boom, but we have a good
economy growing at about 3 percent," said John Silvia, chief economist
at Wells Fargo. "We’re pulling away from the rest of the world."
Investors seemed pleased. The Dow Jones industrial average rose 60 points in morning trading.
The
job market has now reached a significant milestone: Nearly five years
after the Great Recession ended, the economy has finally regained all
the jobs lost in the downturn.
More job growth is needed, though,
because the U.S. population has grown nearly 7 percent since then.
Economists at the liberal Economic Policy Institute have estimated that 7
million more jobs would have been needed to keep up with population
growth.
In addition, pay growth remains below levels typical of a
healthy economy. Average wages have grown roughly 2 percent a year since
the recession ended, well below the long-run average annual growth rate
of about 3.5 percent.
In May, average hourly pay rose 5 cents to
$24.38. That’s up 2.1 percent from 12 months ago and barely ahead of
inflation, which was 2 percent over the same period.
Weak wage
growth has limited Americans’ ability to spend. That, in turn, has
slowed the economy, because consumer spending drives about 70 percent of
economic activity.
Consumer spending has risen at just a 2.2
percent annual rate since 2010, more than a percentage point below the
average yearly increase in the two decades before the Great Recession.
"The
sluggishness in wages is the weak link that is preventing the U.S.
economy from fully expanding its wings," said Gregory Daco, U.S.
economist at Oxford Economics.
One reason for the lack of solid
pay raises: Many of the jobs added since the recession ended in June
2009 have been in lower-paying industries. A similar pattern was evident
in May: Hotels, restaurants and entertainment companies added 39,000
jobs. Retailers gained 12,500.
Manufacturers added 10,000 jobs,
construction firms 6,000.
Still, the United States has now added
more than 200,000 jobs a month for four straight months — the first time
that’s happened since 1999.
"There’s no doubt the rate of job
creation has accelerated," said Dan Greenhaus, chief global strategist
at BTIG LLC. "But there remains a fair bit of slack in the labor
market."
Many economists had predicted late last year that growth
would finally accelerate in 2014 from the steady but modest pace that
has persisted for the past four years. But the economy actually shrank
in the first three months of this year as a blast of cold weather shut
down factories and kept consumers away from shopping malls and car
dealerships.
The U.S. economy contracted at a 1 percent annual rate in the first quarter, its first decline in three
years.
Employers
have shrugged off the winter slowdown and have continued to hire. That
should help the economy rebound because more jobs mean more paychecks to
spend.
Most economists expect annualized growth to reach 3
percent to 3.5 percent in the current second quarter and to top 3
percent for the rest of the year.
Recent economic figures suggest that growth is accelerating.
Auto
sales, for example, jumped 11 percent in May to a nine-year high. Some
of that increase reflected a pent-up demand after heavy snow during the
winter discouraged car buyers. But analysts predict that healthy sales
will continue in coming months, bolstered by low auto-loan rates and the
rollout of new car models.
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Contact Chris Rugaber on Twitter at http://Twitter.com/ChrisRugaber
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