CHRISTOPHER S. RUGABER, AP Economics Writer
WASHINGTON (AP) — Rebounding from a dismal start to the year, the U.S. economy added 223,000 jobs in April, a solid gain that suggested that employers are helping fuel a durable if still subpar recovery.
The job growth helped lower the unemployment rate to 5.4 percent from 5.5 percent in March, the Labor Department said Friday. That is the lowest rate since May 2008, six months into the Great Recession.
The figures provided some reassurance that the economy is recovering from a harsh winter and other temporary headwinds that may have caused it to shrink in the first three months of the year. Yet the bounce back appears to be falling short of hopes that growth would finally accelerate in 2015 and top 3 percent for the first time in a decade.
Most analysts foresee growth of about 2.5 percent this year, similar to the modest expansion typical of much of the 6-year-old recovery.
March’s job gain was revised sharply lower, to 85,000 from 126,000. In the past three months, employers have added 191,000 positions, a decent total but well below last year’s average of 260,000.
“Job growth is going from great to good,” Michael Feroli, an economist at JPMorgan Chase, said.
One reason the economy hasn’t accelerated faster is that overseas economic turmoil is still holding back U.S. growth. A stronger dollar, which has made U.S. goods more expensive overseas, has cut into U.S. factory production. Manufacturers barely added jobs for a second straight month. And last year’s plunge in oil prices has caused drilling firms to lay off thousands of workers.
Drew Matus, an economist at UBS, said April’s job growth was still encouraging, given the persistence of the U.S. economy’s challenges.
“When all is said and done, you are still adding 200,000 jobs a month, which suggests the economy is doing fine,” Matus said.
Investors breathed a sigh of relief because the figures suggested an economic rebound from the January-March quarter — but one not so explosive as to likely cause the Federal Reserve to raise interest rates from record lows anytime soon. The Dow Jones industrial average was up 262 points in early afternoon trading.
The nation’s job growth still isn’t raising worker pay much. Average hourly wages rose just 3 cents in April to $24.87. Wages have risen only 2.2 percent over the past 12 months, roughly the same sluggish pace of the past six years.
Steve Clemons, chief investment strategist at Brown Brothers Harriman Private Banking, said he was surprised by the meager gain in earnings.
“Everything in this cycle has been slow-motion,” he said, referring to the modest recovery from the 2007-2009 Great Recession. “Maybe wages are another example of that.”
Tara Sinclair, a professor at George Washington University and chief economist at the job listings service Indeed, said: “We’re definitely back to that same discussion we were having before March and earlier this year: Things are looking pretty good and going in the right direction, but where is the wage growth?”
The Fed has been monitoring the job market for convincing evidence of a healthier economy. The chronically sluggish pay growth and the downward revision to March’s job gain may dissuade the Fed from raising rates in June or even by fall.
The “Fed could be on hold forever with anemic numbers like these,” said Tom di Galoma, head of fixed income trading for ED&F Man Capital Markets.
The mining industry, which includes oil and gas, cut 15,000 jobs in April, its fourth straight loss. The industry has eliminated 49,000 jobs this year, more than offsetting the 41,000 it had added in 2014.
Manufacturers added only 1,000 jobs last month after a flat reading in March. That’s down from the industry’s average monthly job gain of 18,000 last year.
Construction companies, though, picked up much of the slack by adding 45,000 jobs, the most in 16 months. That is a sign that cold weather had held back building projects in March, when the construction industry cut 6,000 jobs.
The health care industry gained 56,000 jobs in April.
Such solid figures add to other evidence that the economy may be gradually picking up. Home sales staged a big comeback in March, a sign more Americans are making expensive purchases. People bought existing homes at an annual pace of 5.19 million, the National Association of Realtors said.
Those gains are expected to extend into April based on figures on signed contracts released by the Realtors. That would help spur additional growth in the construction sector as builders seek to meet demand.
Some Americans also appear to be gradually stepping up their spending. Service firms such as restaurants, retailers and banks grew at a faster pace in April than in March, according to a survey by the Institute for Supply Management, a trade group of purchasing managers.
___
AP Economics Writers Josh Boak and Paul Wiseman contributed to this report.
Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Tagged with tED