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WASHINGTON (MarketWatch) -- Deflating fears of a new soft patch in the ec onomy, US businesses created a larger-than-expected 274,000 jobs in Ap ril, the Labor Department reported Friday.
Create an Alert The unemployment rate remained at 52%, while average hourly wages rose b y 5 cents to $16, or 03%. "The data are much stronger than expected all the way around and should put the slowdown scenario under suspicion," wrote analysts for ActionEcon omics. Total hours worked in the economy increased by 09%, marking the biggestincrease in eight years. The growth in hours worked is equivalent to add ing 12 million workers to payrolls.
Other surveys had pegged job creation at about 175,000 jobs, and so-called whisper numbers that circulate on trading floors were rumoring numbers closer to 100,000. The growth "casts some doubt as to whether the soft-patch would be as big a deal as some people thought," said Michael Gregory, economist at BMONesbitt Burns in Toronto. Forecasters would probably revise their second -quarter growth forecasts back toward 4%, he said. " "Now we have to wonder if it's a real shift or just another of these stro ng reports that will surround itself by weak ones," he said. US stocks traded higher in the aftermath of the jobs report. Bonds sold off, pushing the 10-year Treasury yield up to 425% from 417%, while t he dollar gained.
Fed fallout Economic growth did slow in the first quarter to 31%, close to the long-term trend. Other early data for April have been mixed, with tepid chain-store sales, stronger auto sales and solid manufacturing sentiment numb ers. On Tuesday, Federal Reserve policymakers raised the central bank's short-term borrowing rate by a quarter of a percentage point to 3%, citing good prospects for the economy, contained inflationary expectations and a l abor market showing signs of "gradually" improving.
"Today's report virtually eliminates any chance of the Fed pausing in their tightening cycle," said Bill Cheney, chief economist for John Hancock Financial Services. "The American worker should be encouraged," said Eric Goodstadt, chief marketing officer for Management Recruiters International. He sees solid job growth continuing and warned Corporate America that the time has come to implement retention strategies to keep its best employees from headi ng out the door for greener pastures. Moreover, it's a great market for college-educated workers with some experience, Goodstadt said, especially those in corporate finance and market ing positions. Also Friday, the Labor Department revised higher March payrolls growth to 146,000 from 110,000 previously. In all, payrolls were revised up by 93 ,000 in February and March. Payrolls have increased by a monthly average of 211,000 to date in 2005, data show. Broad-based improvement Job growth was widespread through the economy, according to a survey of some 400,000 business establishments. Goods-producing industries added 45,000 jobs, with 47,000 in construction offsetting a 6,000-job loss in manufacturing, the ninth decline in the past 12 months. Among 84 manufacturing industries, 50% were hiring in April. Leisure and hospitality industries added 58,000, mostly in food services. Health and education services continued a pattern of strong hiring, adding 35,000 in April. Professional and business services added 36,000, incl uding 10,500 temporary-help workers, who can work in any industry, from manufacturing to mortgage banking. In a separate survey of 60,000 households, the Labor Department found tha t employment increased by 598,000, while unemployment rose by 7,000. For the 31st month in a row, more than 20% of the unemployed had been out of work longer than six months.
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