U.S. payrolls up 288,000 in April
Market sees Fed raising rates in June
By Rex Nutting, CBS.MarketWatch.com
Last Update: 11:16 AM ET May 7, 2004
WASHINGTON (CBS.MW) - U.S. job growth continued at a rapid pace in April, as 288,000 new jobs were created and the unemployment rate fell to 5.6 percent, the Labor Department estimated Friday.
The report was much stronger than expected.
Economists surveyed by CBS MarketWatch expected 172,000 new jobs and a jobless rate of 5.7 percent. See Economic Calendar.
The bond market sold off, driving the yield on the 10-year note to 4.75 percent, the highest since the summer of 2002. See Bond Report. Stocks were mixed at the open, with the Nasdaq gaining 0.5 percent, while the broader S&P 500 was down 0.3 percent on fears about higher interest rates. See Market Snapshot.
The market now expects the first rate hike in June.
March's payroll gains were revised higher from 308,000 to 337,000. February's job gains were also revised higher. Job growth, up eight months in a row, has averaged 217,000 a month so far in 2004. Since August, payrolls are up 1.1 million. Read the full report.
"It was a long time coming, but once the floodgates opened, the jobs have come rushing out," said Steve Stanley, chief economist for RBS Greenwich Capital.
The report could bolster President Bush's campaign, diverting attention from Iraq toward the improving domestic economy. "Our economy has turned the corner," Treasury Secretary John Snow said in speech in Chicago. "That tax bill put oxygen in the economy."
In February, the administration predicted about growth of about 330,000 jobs a month this year.
Democrats continued to pound the president's record. "America is still in the worst job recovery since the Great Depression," said Terry McAuliffe, chairman of the Democratic National Committee. "The facts remains that under this president more jobs have been lost than created -- by far. 8.1 million Americans are still looking for work and long-term unemployment is at its highest in twenty years.
The report could also nudge the Federal Reserve toward raising rates at its June meeting. The Federal Open Market Committee said Tuesday it could raise rates at a "measured" pace.
Prices on federal funds futures at the Chicago Board of Trade indicate an 86 percent chance of a rate hike in June, up from 48 percent Thursday. The market now sees the fed funds rate rising from 1 percent currently to 2 percent by the end of the year.
"In my mind, we've seen enough on the jobs front (and the inflation front as well) to justify the beginning of the tightening cycle, so, barring a dramatic softening in May, our call of a June rate hike looks very solid," Stanley said.
"Bear in mind though, the labor force participation rate remained at a 1988 low of 65.9 percent, suggesting very significant potential labor force additions, which could be fuel for a longer period of above-trend growth in employment without stretching deep into potential labor resources," said Steve Wieting, senior economist for Citigroup.
Job growth was widespread in April, with 61.7 percent of industries adding workers in the month. Services added 246,000 while goods-producing industries added 42,000, according to the survey of business establishments.
Manufacturing employment increased by 21,000, the third, straight increase following revisions. Manufacturing employment had not risen for 42 months before February's 7,000 gain. The gains came in durable-goods manufacturing, such as fabricated metals and machinery.
Half of the gains in service jobs came in professional and business services. Temporary help jobs increased by 35,000. Retail added 23,000 jobs. Health care added 30,000 jobs.
The average workweek was steady at 33.7 hours, but total hours worked in the economy increased by 0.3 percent. The factory workweek fell by 0.3 hours to 40.6 hours.
Average hourly wages rose 0.3 percent to $15.59. Hourly wages are up 2.2 percent year-over-year after sinking as low as 1.6 percent year-over-year in February.
A separate survey of households showed employment rose by 278,000 during the month, with 188,000 fewer unemployed workers. The household and establishment surveys had diverged noticeably throughout 2003, with the household survey showing stronger job growth. The payroll figures come from the establishment survey, while the unemployment rate comes from the household survey.
The number of unemployed workers who've been out of work longer than six months plunged by 188,000 to 1.8 million, accounting for 22.1 percent of the 8.2 million jobless workers.
"We still have a long way to go before workers begin to feel the effects of this recovery," said Rep. Pete Stark, D-Calif., the top Democrat on the Joint Economic Committee. "The share of the unemployed who have been jobless for more than six months has remained at or above 20 percent for 19 consecutive months, the longest period since the Labor Department has been collecting these data."
The median duration of unemployment fell to 9.5 weeks from 10.3 weeks in March.
Market sees Fed raising rates in June
By Rex Nutting, CBS.MarketWatch.com
Last Update: 11:16 AM ET May 7, 2004
WASHINGTON (CBS.MW) - U.S. job growth continued at a rapid pace in April, as 288,000 new jobs were created and the unemployment rate fell to 5.6 percent, the Labor Department estimated Friday.
The report was much stronger than expected.
Economists surveyed by CBS MarketWatch expected 172,000 new jobs and a jobless rate of 5.7 percent. See Economic Calendar.
The bond market sold off, driving the yield on the 10-year note to 4.75 percent, the highest since the summer of 2002. See Bond Report. Stocks were mixed at the open, with the Nasdaq gaining 0.5 percent, while the broader S&P 500 was down 0.3 percent on fears about higher interest rates. See Market Snapshot.
The market now expects the first rate hike in June.
March's payroll gains were revised higher from 308,000 to 337,000. February's job gains were also revised higher. Job growth, up eight months in a row, has averaged 217,000 a month so far in 2004. Since August, payrolls are up 1.1 million. Read the full report.
"It was a long time coming, but once the floodgates opened, the jobs have come rushing out," said Steve Stanley, chief economist for RBS Greenwich Capital.
The report could bolster President Bush's campaign, diverting attention from Iraq toward the improving domestic economy. "Our economy has turned the corner," Treasury Secretary John Snow said in speech in Chicago. "That tax bill put oxygen in the economy."
In February, the administration predicted about growth of about 330,000 jobs a month this year.
Democrats continued to pound the president's record. "America is still in the worst job recovery since the Great Depression," said Terry McAuliffe, chairman of the Democratic National Committee. "The facts remains that under this president more jobs have been lost than created -- by far. 8.1 million Americans are still looking for work and long-term unemployment is at its highest in twenty years.
The report could also nudge the Federal Reserve toward raising rates at its June meeting. The Federal Open Market Committee said Tuesday it could raise rates at a "measured" pace.
Prices on federal funds futures at the Chicago Board of Trade indicate an 86 percent chance of a rate hike in June, up from 48 percent Thursday. The market now sees the fed funds rate rising from 1 percent currently to 2 percent by the end of the year.
"In my mind, we've seen enough on the jobs front (and the inflation front as well) to justify the beginning of the tightening cycle, so, barring a dramatic softening in May, our call of a June rate hike looks very solid," Stanley said.
"Bear in mind though, the labor force participation rate remained at a 1988 low of 65.9 percent, suggesting very significant potential labor force additions, which could be fuel for a longer period of above-trend growth in employment without stretching deep into potential labor resources," said Steve Wieting, senior economist for Citigroup.
Job growth was widespread in April, with 61.7 percent of industries adding workers in the month. Services added 246,000 while goods-producing industries added 42,000, according to the survey of business establishments.
Manufacturing employment increased by 21,000, the third, straight increase following revisions. Manufacturing employment had not risen for 42 months before February's 7,000 gain. The gains came in durable-goods manufacturing, such as fabricated metals and machinery.
Half of the gains in service jobs came in professional and business services. Temporary help jobs increased by 35,000. Retail added 23,000 jobs. Health care added 30,000 jobs.
The average workweek was steady at 33.7 hours, but total hours worked in the economy increased by 0.3 percent. The factory workweek fell by 0.3 hours to 40.6 hours.
Average hourly wages rose 0.3 percent to $15.59. Hourly wages are up 2.2 percent year-over-year after sinking as low as 1.6 percent year-over-year in February.
A separate survey of households showed employment rose by 278,000 during the month, with 188,000 fewer unemployed workers. The household and establishment surveys had diverged noticeably throughout 2003, with the household survey showing stronger job growth. The payroll figures come from the establishment survey, while the unemployment rate comes from the household survey.
The number of unemployed workers who've been out of work longer than six months plunged by 188,000 to 1.8 million, accounting for 22.1 percent of the 8.2 million jobless workers.
"We still have a long way to go before workers begin to feel the effects of this recovery," said Rep. Pete Stark, D-Calif., the top Democrat on the Joint Economic Committee. "The share of the unemployed who have been jobless for more than six months has remained at or above 20 percent for 19 consecutive months, the longest period since the Labor Department has been collecting these data."
The median duration of unemployment fell to 9.5 weeks from 10.3 weeks in March.
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