U.S. payrolls surge, jobless rate hits 5-1/2 year low

May 02 2014, 20:53 IST
Comments 0
SummaryU.S. job growth increased at its fastest pace in more than two years in April...

U.S. job growth increased at its fastest pace in more than two years in April, suggesting a sharp rebound in economic activity early in the second quarter.

Nonfarm payrolls surged 288,000 last month, the Labor Department said on Friday. That was the largest gain since January 2012 and beat Wall Street's expectations for an increase of 210,000. March and February data were revised to show 36,000 more jobs than previously reported.

"The economy really has strong underlying fundamentals supporting its growth. Temporary headwinds such as the bad weather can be certainly managed," said Russell Price, senior economist at Ameriprise Financial in Troy, Michigan.

Still, the report did give some worrisome signals on the economy's health.

While the unemployment rate dived 0.4 percentage point to a 5-1/2 year low of 6.3 percent, part of the decline was because hundreds of thousands of people left the labor force.

Overall, however, the data suggested the economy was gathering strength and led investors to pull forward their bets on when the Federal Reserve will raise interest rates.

U.S. Treasury debt yields soared after the report, while the dollar jumped to session highs against the euro and the yen. U.S. stock prices rose marginally.

Bets on U.S. short-term interest rates suggested Wall Street is now pricing in a Fed rate hike in June 2015, based on CME FedWatch, which tracks rate hike expectations using its Fed funds futures contracts. Before the jobs data was released, the Fed was seen raising rates in July of that year.

The employment report joins other upbeat data such as consumer spending and industrial production in suggesting that sputtering growth in the first quarter was an aberration, weighed down by an unusually cold and disruptive winter.

The Fed on Wednesday shrugged off the dismal first quarter performance. The U.S. central bank, which announced further reductions to the amount of money it is pumping into the economy through monthly bond purchases, said indications were that "growth in economic activity has picked up recently."

Economists expect second-quarter growth to top a 3 percent pace.

HOUSEHOLD SURVEY MIXED

While details of the bigger survey of employers were robust, the smaller and volatile household survey from which the unemployment rate is calculated was mixed, with household employment falling slightly.

The labor force also declined by 806,000 people.

"That is gargantuan decline," said Tom Porcelli, an economist at RBC Capital Markets in New York.

The labor force participation rate, or the share of working-age Americans who are employed and unemployed

Single Page Format
TAGS:
Ads by Google

More from World News

Reader´s Comments
| Post a Comment
Please Wait while comments are loading...