Blunting worries about the American economy’s momentum after a stretch of lackluster growth this year, the government reported on Friday that employers added a hefty 280,000 jobs in May, well above the average monthly totals logged over the last year.þþThe official unemployment rate ticked up to 5.5 percent, as more Americans returned to the labor force and returned to actively looking for work. At the same time, hourly wages rose 0.3 percent last month, finally providing workers with some long-awaited gains.þþUnited States markets were expected to open lower on concerns that the strong report would provide further reason for the Federal Reserve to raise short-term interest rates later this year from their near zero level.þþAlthough the report provides just a snapshot of the economy and is subject to revision, analysts are looking at this freshest set of figures to help pierce the confusion over whether the economy’s contraction of 0.7 percent during the first quarter of 2015 was a blip, partly a casualty of the harsh winter, or evidence of a more fundamental slowdown.þþ“This is a confirmation that the economy is performing well and the first quarter was an aberration,” said Carl Tannenbaum, chief economist at Northern Trust.þþHe added that he was heartened by the growth in wages, which have now risen 2.3 percent over last year. “It’s good for workers and also a sign that capacity in the labor market is being utilized more fully.”þþAlthough the recovery from the recession is now reaching its sixth anniversary, the gains have not been spread evenly, with the fortunes of some Americans rising while others languish. As a survey in October on families’ financial well-being by the Federal Reserve showed when it was released recently, nearly two-thirds of respondents said they were either “doing O.K.” or “living comfortably,” with the rest reporting they were “just getting by” or struggling.þþ“It’s a tale of two economies, the economy of the unskilled, and the economy of the semiskilled and the skilled,” said Robert A. Funk, chairman and chief executive of Express Employment Professionals, a staffing agency based in Oklahoma City that operates in 49 states.þþThere is pent-up demand for those with skills, like machinists, engineers and information and technology workers, he said, but those without that edge are continuing to have a tough time.þþ“We’re out here on Main Street, not Wall Street,” said Mr. Funk, former chairman of the Federal Reserve Bank of Kansas City. “We get a feel of medium and small companies and their attitudes. They are reticent to hire because they are not sure which way the economy is going to go.”þþFor those looking for progress, this week brought evidence of modest, if plodding improvements.þþA roundup of reports compiled from each of the Federal Reserve’s 12 district banks suggested that the overall economy expanded over the previous two months. The survey, known as the Beige Book, found: “Employment levels were up slightly over the reporting period, with some reports of layoffs. Wages rose slightly.”þþThe trade balance also improved in April. The deficit, though still sizable at $40.9 billion, shrank from $50.6 billion in the previous month.þþThe number of people applying for unemployment insurance also dropped last week, the 13th week in a row that new claims have been below 300,000. Although the four-week moving average edged up slightly to 275,000, it is still near a 15-year low.þþDespite low gasoline prices, which leave more money in people’s wallets, consumers have remained guarded, choosing to bank their savings rather than spend them. The one exception seems to have been car sales. American automakers sold more than 1.6 million vehicles in May, or 17.8 million on a seasonally adjusted annualized basis. That is the largest single-month total in nearly 10 years.þþWall Street was paying particular attention to the report on Friday because of its potential impact on the Fed’s decision about when to raise interest rates above their near-zero levels. This week, James B. Bullard, president of the St. Louis Fed, said that while he expected the economy to improve enough to justify a rate increase this year, the frail first quarter has made everyone doubly cautious.þþ“We should be and are appropriately talking about how to normalize monetary policy,” Mr. Bullard said. “On the other hand, you’ve got near-term concerns — the first-quarter negative G.D.P. number and maybe some consumption numbers, including retail sales — that look weaker than we had anticipated. I think that will all be transient, and it will turn out that we’ll have stronger data later in the year, and that will enable us to get going on the normalization process.”þþOn Thursday, the International Monetary Fund asked the Fed to hold off raising rates until the first half of 2016 because of disappointing growth and a lack of inflation.þþMost Americans are increasingly optimistic about their economic future, according to the Fed’s survey on economic well-being. Still, daily financial challenges manifest themselves in small ways and large. Nearly half of those surveyed, for example, said they lacked the resources to cover an unexpected emergency that cost $400. Nearly one-third said they had skipped some form of medical care because they could not afford it.þþAnd many would increase their incomes if they could: More than one-third of all workers and 49 percent of part-timers said they would prefer to work more hours at their current wage.þþWage stagnation also remains a blot on the recovery’s record. “Even a slight increase in year-over-year wage growth would be new and something different,” helping to lure back people who had abandoned the work force, said Tara M. Sinclair, an associate professor of economics at George Washington University and an economist at Indeed.com.
Source: NY Times
