Arab Today, arab today us jobs gain in may despite sequester cuts
Last Updated : GMT 19:43:45
Arab Today, arab today
Arab Today, arab today

US jobs gain in May despite sequester cuts

Arab Today, arab today

Arab Today, arab today US jobs gain in May despite sequester cuts

Washington - AFP

The US economy continued to add jobs in May at a moderate pace despite worries that the government\'s sequester spending cuts would cause private businesses to slow hiring. The 175,000 net new jobs added last month confirmed that the economy continues to grow steadily if not spectacularly, with strength from the retail sector as well as the recovering construction industry. Analysts said the numbers were better than expected and could, if sustained over a few more months, lead the Federal Reserve to begin reeling in its $85 billion a month bond purchase program aimed at stimulating the economy. But others had doubts the pace would be sustained, saying that the sequester cuts would increasingly show up in slower business activity. And they pointed out that new jobs were still largely in low-paying fields. \"Improvement in labor markets remains modest, on balance. We do see labor market trends, income, and hours worked, as indicating the economy is slowing in Q2,\" said Michael Gapen of Barclays Bank. \"May\'s larger-than-expected nonfarm employment gain did little to dispel the notion that economic activity is decelerating in the second quarter,\" said Wells Fargo Securities in a research note. Markets were split in their reaction. Bond prices sank and yields jumped as investors saw it as confirming expectations of Fed tightening, and the dollar gained as well. Stocks -- normally sensitive to the prospect of higher interest rates -- also jumped, with the S&P 500 up 1.3 percent and the Dow Jones Industrial Average adding 1.4 percent. \"The May Employment Report supports the notion of a modest recovery, although we continue to expect that it may not be a smooth one,\" said Jason Schenker at Prestige Economics. At 175,000, the May job creation numbers were a firm gain from April\'s 149,000 net new positions, though still below the 193,000-a-month January-April average. Economists had lowered their expectations amid worries about the impact of government spending cutbacks, Europe\'s continued recession, and weakness in the Chinese economy. The unemployment rate rose 0.1 percentage points to 7.6 percent, a move not seen as significant, with the number of Americans officially jobless essentially unchanged at 11.8 million. Some details highlighted strength in the market: the labor force grew by 420,000 last month, the number of those who have dropped out of the market fell by 231,000, and the number of Americans working part-time -- because they have to -- fell by 12,000. The jobs growth was not seen as strong enough to persuade the Federal Reserve to begin trimming its quantitative easing (QE) bond buys, even as some central bank policy makers worry the program could set off a burst of inflation. \"After all, the unemployment rate is at 7.6 percent, which is a long way from 6.5 percent,\" said Schenker, citing the target rate for unemployment the Fed set for tightening monetary policy. Gapen, meanwhile, added: \"We do not see the number as providing clarity on the state of improvement in labor markets and the potential for a reduction in the pace of (QE) asset purchases.\" Harm Bandholz of UniCredit Economics said the 175,000 figure was in the low range of what the Fed probably wants to see each month to begin trimming QE. \"What is still missing, though, is the confirmation that the improvement is sustained.\" The details of the data were somewhat uneven. Job creation was still all in the private sector, but reductions by federal and local authorities had slowed, with a net loss for the month of just 3,000 government jobs. Retail trade jobs jumped by 27.7 million, and construction added seven million jobs. On the other hand, temporary help services added 25.6 million, a sign of weakness in overall hiring trends. \"These are all low-paying sectors. It is worth noting that the job growth reported in these sectors is more an indication of the weakness of the labor market than the type of jobs being generated by the economy,\" said Dean Baker, of the Center for Economic and Policy Research.

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Arab Today, arab today us jobs gain in may despite sequester cuts Arab Today, arab today us jobs gain in may despite sequester cuts

 



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