U.S. Unemployment Falls to Lowest Level Since May 2008

U.S. Payrolls Rebound in April, Unemployment Down

April’s job-creation score was better, March was worse, and the U.S. jobless rate crept closer to the Federal Reserve’s moving target for full employment.

The 223,000 increase in payrolls last month followed a revised 85,000 gain in March that was the smallest since June 2012, figures from the Labor Department showed Friday in Washington. The jobless rate fell to 5.4 percent, the lowest since May 2008, from 5.5 percent.

Stocks and bonds rallied as the figures indicated the economy was settling into a moderate pace of growth after a first-quarter slump. Wages remained a sticking point, with last month’s gain falling short of the median forecast in a Bloomberg survey, indicating Fed policy makers can take their time to raise the benchmark interest rate.

“Wage growth is accelerating, but it’s quite gradual, more gradual than we would expect in a market where the unemployment rate is 5.4 percent,” said Gregory Daco, head of U.S. macroeconomics at Oxford Economics USA Inc., whose payrolls forecast of 221,000 was among the closest in a Bloomberg survey.

Shares of companies catering to consumers, including Home Depot Inc. and Whirlpool Corp., were among stocks that climbed. The Standard & Poor’s 500 Index climbed 1.4 percent to 2,116.1 at the close in New York. The yield on the Treasury 10-year note fell to 2.14 percent from 2.18 percent late Thursday.

Bloomberg Survey

The increase in employment was close to the median forecast in a Bloomberg survey of 96 economists that called for a 228,000 advance. Estimates ranged from gains of 175,000 to 327,000. March was revised down by 41,000 from a previously reported 126,000 advance.

Wage growth remained limited, with average hourly earnings rising 0.1 percent in April after a revised 0.2 percent March gain that was weaker than initially reported. The median forecast in a Bloomberg survey projected a 0.2 percent increase for last month.

Compared with a year earlier, hourly pay was up 2.2 percent last month, holding within the narrow range tracked over the past four years.

“This is a very solid report showing steady growth,” Labor Secretary Tom Perez said in an interview. “At the same time, as I look at this report, I also recognize the unfinished business of wage growth continues and the unfinished business of making sure that everybody who wants to get back in the labor force can do so.”

Payroll Breakdown

Construction and health care were among the industries that accelerated the pace of hiring last month as the economy emerged from temporary setbacks that included bad weather and a labor dispute at West Coast ports.

Builders took on 45,000 workers in April, the biggest gain since January 2014. Employment in health services increased 55,600, the most in five months.

The report also included positive news on the size of the labor force. The participation rate, which indicates the share of working-age people who are employed or looking for work, increased to 62.8 percent from 62.7 percent in March, which matched the lowest since 1978. The gain was paced by 45-to-64 year-old Americans.

Michele Natale, 54, a licensed practical nurse who’s been looking for steady employment for a year, said she’s relieved to be starting a new, full-time job next week with Blue Cross Blue Shield. The work couldn’t come at a better time as there’s currently “not enough money to pay rent, no money for food, no money for gas -- it’s been horrible,” she said.

Better Pay

When a former manager helped her find the job, “I was elated, because the benefits are good, and the money is phenomenal for down here,” said Natale, who lives in Flagler Beach, Florida. “I just feel very fortunate, especially because of my age.”

The slowdown in employment tied to cheaper oil prices persisted in April, the Labor Department’s report showed. The mining industry, which includes oil extraction and services, lost 15,000 jobs, the most since May 2009.

Fed Chair Janet Yellen and her colleagues will use the data to help parse the strength of the economy as they consider raising interest rates for the first time since 2006. Officials, who dropped a promise in March to be patient on raising rates, say they can act at any policy meeting, beginning with their gathering on June 16-17. Most expect them to move later this year.

Fed Attuned

“The report comes at a time in which I, for one, at least am very tuned in to what signals the economy is throwing off,” Federal Reserve Bank of Atlanta President Dennis Lockhart told reporters in Baton Rouge, Louisiana, on May 6. “I view it as a very important one to tell us about the growth momentum in the economy.”

The Fed now defines full employment as between 5 percent and 5.2 percent, according to projections released after their March 17-18 meeting. The range was lowered from 5.2 percent to 5.5 percent after the jobless rate reached the top of the scale in February.

The economy ground to a near-halt in the first quarter, weighed down by cheap oil, a stronger dollar, labor-related delays at West Coast ports and rough winter weather in parts of the country. Fed policy makers have said some of the headwinds holding back the U.S. will probably fade and give way to “moderate” growth.

Economy Stalls

Gross domestic product rose at a 0.2 percent annualized rate after advancing 2.2 percent in the prior quarter, Commerce Department data showed last month. Household spending, the biggest part of the economy, advanced at a 1.9 percent pace.

Companies including Comcast Corp. are creating jobs to capture more of those consumer dollars. The biggest U.S. cable-TV provider will create more than 5,500 jobs during the next few years to improve consumer service, with three new customer-support centers set up in New Mexico, Washington and Arizona, the company said in a May 5 statement.

For more, read this QuickTake: The Monthly U.S. Jobs Report

While more jobs and rising wages will be a boost to consumers, profits will probably suffer if productivity fails to pick up. Companies have been hesitant to invest in new equipment, and rising labor costs without offsetting increases in efficiency can hurt earnings.

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