Unemployment holds steady

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WASHINGTON (AP) – Job creation shifted into a slower gear in April but isn’t about to veer off its generally good course.

That was the message from economists after the Labor Department reported Friday that employers boosted payrolls by just 138,000, the smallest increase in six months.

The nation’s unemployment rate held steady at 4.7 percent.

Stephen Stanley, chief economist at RBS Greenwich Capital, viewed last month’s slower job growth as more of “a one-time bump in the road” than a harbinger of a serious backslide in labor market activity.

Most of the weakness reflected thousands of jobs cuts by retailers. Manufacturers actually added the most number of jobs in nearly two years. Financial firms, professional services, construction and other companies all boosted employment during the month.

The fresh snapshot painted a mixed picture of the country’s employment climate and suggested the economy is heading for more moderate but still healthy growth, analysts said.

“It is consistent with the idea that the economy – which had been bounding ahead – is throttling back a notch,” said Mark Zandi, chief economist at Moody’s Economy.com.

Wall Street rallied.

The Dow Jones industrials shot up 138.88 points to close at 11,577.74 – a new six-year high. The slower job growth bolstered investors’ hopes that the Federal Reserve will soon take a break in its rate-raising campaign.

Workers’ wages went up sharply in April.

Average hourly earnings climbed to $16.61, a big 0.5 percent jump from March. Over the last 12 months, earnings rose 3.8 percent, the largest 12-month gain in nearly five years.

Wage growth is good for workers but a rapid, sustained acceleration can ignite inflation concerns.

Some economists said the acceleration in wages last month was probably affected by the mix of jobs: the addition of more higher-paying factory jobs and the loss of lower-paying retail positions during the month.

Because of that, some economists said they weren’t overly worried that overall wage inflation was taking off.

To fend off inflation, Federal Reserve Chairman Ben Bernanke and his colleagues are expected to bump up interest rates on May 10 by one-quarter percentage point to 5 percent.

After that, many economists predict the Fed will take a break in its two-year rate-raising campaign. Analysts in that camp said Friday’s employment report would justify such a pause. However, others who are more worried about the prospects of an inflation flare-up believe the Fed will push rates even higher.

The payroll performance in April fell short of the 200,000 jobs that economists were forecasting would be added during the month.

Job gains in February and March, meanwhile, turned out to be less than previously estimated. Payrolls grew by 200,000 in each month. While that was 36,000 fewer jobs for the two months combined, it still was good job growth.

The report comes as President’s Bush standing with the public has deteriorated. Bush’s job-approval rating is now at 33 percent, the lowest in AP-Ipsos polling. Bush called Friday’s job growth good, while Democrats suggested they would like to see stronger gains.

On the payroll front, retailers cut just over 36,000 jobs in April, the most since September.

Some economists said the declines reflected a move by retailers to pare staffing after bulking up their employee ranks in March. Some said the drop was a byproduct of consolidation seen in retailing such as at department stores. Others suggested the decline was related toward the growth of self-service checkouts and the use of other technology at stores.

Information companies, including publishers, shed 2,000 jobs during the month.

But at other industries the hiring picture was much brighter. Manufacturers boosted payrolls by 19,000, the most in nearly two years. Professional and business services added 28,000 positions. Financial firms increased employment by 26,000. Construction companies added 10,000 jobs.

The report comes as analysts expect the economy to log slower growth in the April-to-June quarter, predicting it will expand by about 3 percent. Such growth would mark a moderation from the brisk 4.8 percent pace registered in the January-to-March period but would still be considered healthy.

Just how much strength the second quarter shows will be affected by the appetite of businesses and consumers to spend and invest.

So far, they have been holding up fairly well under the strain of high energy prices.

Other recent barometers – including retail sales, manufacturing and service-sector activity – all looked healthy for April.

Oil prices topped $75 a barrel, a record high in late April. Oil prices are now hovering above $70 a barrel. Gasoline prices have marched higher and are above $3 a gallon in some areas.



On the Net:

Employment report: http://www.bls.gov/

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