US economy shrugs off end of brutal winter, bounces back with robust gain of 288,000 jobs

  • Article by: CHRISTOPHER S. RUGABER , Associated Press
  • Updated: May 2, 2014 - 11:11 PM
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Construction work continues on an apartment building in downtown Minneapolis. Opus is the construction firm coordinating the project. In April, employment in construction grew by 32,000, with job growth in heavy and civil engineering construction (+11,000) and residential building (+7,000). Construction has added 189,000 jobs over the past year, with almost three-fourths of the gain occurring in the past 6 months. ] JIM GEHRZ • jgehrz@startribune.com / Burnsville, MN / May 2, 2014 / 9:30 AM / . ] JIM GEHRZ • jgehrz@startribune.com / Minneapolis, MN / May 1, 2014 / 1:30 PM

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WASHINGTON — The American economy shrugged off the end of a brutal winter last month, rebounding with the biggest hiring surge in two years and suggesting that the job market's gains could endure.

Employers added 288,000 jobs across industries from manufacturing to construction to accounting. Even local governments hired. The unemployment rate sank to 6.3 percent, its lowest point since 2008, from 6.7 percent.

But the rate fell that far because many fewer people began looking for work in April, thereby reducing the number of unemployed. The proportion of Americans who either have a job or are looking for one dropped to a three-decade low.

And the monthly employment report the government released Friday showed that worker pay has yet to pick up — evidence that the job market has not fully recovered.

Yet April's robust hiring gains suggested that the economy is returning to the solid pace of growth it achieved in the second half of 2013, before it was hammered by a harsh winter. Job growth has averaged 203,000 a month in the past six months, similar to last year's average of 194,000.

Analysts said the economy is facing fewer hurdles now. In addition to better weather, growth is no longer held back by steep government spending cuts, which slowed growth in 2013. Many companies had also stockpiled too many goods last fall, forcing them to cut back in the first quarter to clear their shelves.

"The absence of these factors is finally allowing the economy's underlying strength to come to the surface," said Bart Van Ark, chief economist at the Conference Board. "The result is not just a relatively strong gain in jobs in April but probably more of the same in May and June."

Explorys, a health-care data provider, has ramped up hiring in the past six months as more hospitals have used its services to limit their costs. Explorys' software can analyze patient data to predict which ones are most likely to need follow-up visits at home to prevent any complications.

The Cleveland-based company has added about 30 people in the past six months, bringing its staff to about 140.

"We need more software developers, data analysts and data scientists," says CEO Steve McHale. "The economy's improvement has served us well."

April's solid job growth wasn't enough to boost stock prices. The Dow Jones industrial average fell 48 points in afternoon trading.

The unemployment rate is now at the lowest level in 5½ years. It's fallen far enough that economists are anticipating the key next step in an improving job market: higher pay. In the past, when employers have had to draw from a smaller pool of unemployed people, they've typically been forced to offer higher pay.

That hasn't happened yet. And analysts differ about when pay might pick up.

Joseph LaVorgna, chief U.S. economist at Deutsche Bank, noted that the unemployment rate is near its seven-decade average of 6.1 percent. At that point, "you've typically seen wage and inflation pressures build," LaVorgna said. "And I see no reason why it won't happen this time as well."

Higher prices and rising incomes could also eventually force the Federal Reserve to more quickly withdraw its efforts to spur borrowing, spending and growth by holding down interest rates.

Economists note that one-third of the unemployed have been out of work for six months or longer, and recent research suggests that many of them aren't being seriously considered by employers. If so, that would mean employers are competing for a smaller pool of available workers than the unemployment rate suggests and might have to raise pay soon.

Many of the long-term jobless stopped looking for work last month. Their ranks fell 300,000 — the sharpest drop in 2½ years — to 3.5 million.

But many other economists, likely including Fed Chair Janet Yellen, point to factors suggesting that there are still a huge number of Americans desperate for full-time work. The number of people working part-time jobs who would prefer full-time positions, for example, rose by 50,000 last month to 7.5 million.

  • related content

  • Construction work continues on an apartment building in downtown Minneapolis. Opus is the construction firm coordinating the project. In April, employment in construction grew by 32,000, with job growth in heavy and civil engineering construction (+11,000) and residential building (+7,000). Construction has added 189,000 jobs over the past year, with almost three-fourths of the gain occurring in the past 6 months. ] JIM GEHRZ ‚Ä¢ jgehrz@startribune.com / Burnsville, MN / May 2, 2014 / 9:30 AM / . ] JIM GEHRZ ‚Ä¢ jgehrz@startribune.com / Minneapolis, MN / May 1, 2014 / 1:30 PM

  • The U.S. unemployment rate fell to 6.3% in April, though part of the drop came from more people leaving the workforce as well as more people getting jobs.

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