Companies boost hiring as economic growth picks up after weak start to the year
New York - The U.S. economy added 288,000 jobs in April, sharply beating expectations and pushing the unemployment rate lower, in the latest sign the world’s largest economy is regaining momentum.
The jump in U.S. payrolls last month was the highest since January 2012 and followed a revised 203,000 increase the prior month, the Labor Department report showed on Friday. The unemployment rate fell to 6.3 percent from 6.7 percent as job growth has averaged 190,000 per month over the prior 12 months.
The key non-farms payroll report highlighted the economy’s rebound after a severe winter at the start of the year. In April, employment growth was widespread, led by gains in professional and business services, retail, food services and drinking places, and construction.
The retail and construction sectors added 34,500 and 32,000 jobs, respectively. Meanwhile, the manufacturing sector added 12,000 jobs, according to the report.
“After several months of weak job numbers, the April gain of 288,000 jobs on top of a net upward revision in prior months of the year is reassuring that the labor market continues to improve and that economic growth should pick up,” said John Silvia, chief economist at Wells Fargo in a note to clients.
Earlier this week the Federal Reserve said that growth has picked up after a slowdown during the winter months.
“Growth in economic activity has picked up recently, after having slowed sharply,” the Federal Open Market Committee said Wednesday in Washington after its rate-setting meeting.
The US central bank left its benchmark lending rate unchanged at 0.0-0.25 percent and reduced its monthly bond purchases of bond securities by another $10 billion to $45 billion. At the same time, the Fed repeated that it’s likely to keep the benchmark interest rate near zero for a “considerable time” after bond purchases end.
Analysts said Friday’s strong report is not likely to change the Fed’s approach to a gradual slowdown in its stimulus measures.
“Fed Chair Janet Yellen in particular appears convinced that other indicators suggest there is still plenty of slack in the labour market, something supported by continued sluggishness of wage growth,” analysts at Capital Economics said. “Accordingly, we still expect the Fed to continue to taper its asset purchases only slowly. Looking further ahead, we think that the Fed will wait until midway through next year before hiking interest rates, with this well sign-posted by forward guidance.”
Wall Street initially welcomed the upbeat jobs report and the main three benchmark stock indices climbed as demand for safe-havens, such as government bonds, fell.
But Russia-Ukraine tensions weighed on sentiment and by midday in New York stocks were little changed, while the yield on the US 10-year Treasury note – which moves inversely to prices – fell 2 basis points to 2.59 per cent.
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