US jobless rate falls to 7.5 percent in April
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The US jobless rate fell to 7.5% in April with 165,000 jobs added, the Labor Department said Friday. The news prompted the Dow Jones to rise more than 140 points on the day and the dollar spiked briefly.
A solid job creation report for April and a fall in the jobless rate to 7.5 percent sweetened the picture for the US economy Friday, amid worries that it has tumbled into a "spring swoon."
The Labor Department said the economy added a firm 165,000 jobs last month, and revised sharply upward the numbers for February and March, adding 114,000 net new positions to the previously reported data.
The gains came even as taxes rose and government spending tightened under the sharp "sequester" cuts, which still threaten to hold economic growth back this year.
The improved jobs numbers for the three months pressed the unemployment rate down 0.1 percentage point to 7.5 percent, underscoring steady if not spectacular gains in the job market in the past year. In April 2012, the jobless rate was 8.1 percent.
The better-than-expected data sparked a surge in US and European stocks, with the key New York indices smashing through to new records.
The S&P 500 closed up 1.05 percent at 1,614.42, its first trip past 1,600, while the Dow Jones Industrial Average passed the 15,000 barrier for the first time, but slipped back, gaining 0.96 percent at 14,973.96.
The dollar spiked higher on the news but quickly reversed course, to trade lower at around $1.3118 per euro.
Alan Krueger, chairman of the White House's Council of Economic Advisers, said the data showed the economy's continuing pull away from the 2008-2009 Great Recession.
But he warned that the push to further reduce government spending by Republicans in Congress could hurt growth.
"Now is not the time for Washington to impose self-inflicted wounds on the economy," he said in a statement.
"The administration continues to urge Congress to replace the sequester with balanced deficit reduction, while working to put in place measures to create middle-class jobs, such as by rebuilding our roads and bridges and promoting American manufacturing."
The Labor Department report sharply revised the overall picture of the economy more broadly from just one month ago, when analysts were shocked by the initial estimate of net jobs generated in March, a paltry 88,000.
Coupled with other data, the March report had suggested a spring stall in the economy, the result of payroll tax increases that took effect in January and sequester spending cuts that started on March 1.
The big surprise in the report was the revision of the March jobs growth number to 138,000, as well as February's, which gained 64,000 to 332,000.
"The message is that last month's weaker-than-expected report was largely a false alarm," said Jim O'Sullivan, chief US economist at High Frequency Economics.
As over most of the past year, April's gains were all in the private sector, as government continued to shed jobs.
Job creation was strongest in the professional and business services sector, tourism and entertainment, retail trade and health care, while industrial sector jobs shrank.
Still, there were clear signs of ongoing weakness in the data.
Average hours worked per week in the private sector slipped to 34.4 from 34.6 in March, a possible sign of weakness in the economy, as was a 278,000 rise in the number of people forced to work part time, to 7.92 million.
The number of people counted as officially unemployed was little changed at 11.7 million.
In addition, the fall in jobs in the industrial sector, with manufacturing jobs flat, showed that efforts to rebuild US industry into a larger motor of the economy were sagging.
Other data measures on Friday pointed to continued weakness: the ISM services purchasing managers index showed lower growth, and the Commerce Department said new orders for manufactured goods sank in March.
Despite the strong job creation, summed up Nariman Behravesh, chief economist at IHS, the economy was still in a spring swoon.
"The full impact of the sequester cuts is yet to be felt and things will likely get softer before improving," he said.