Tag Archives: Job Growth

Fed officials turn focus to rate debate, eye on jobs, inflation

By Howard Schneider and Ann Saphir

WASHINGTON (Reuters) -U.S. Federal Reserve officials on Monday turned their focus towards a debate over interest rate policy that is likely to intensify in coming months, with one top official saying the conditions for a rate hike could be met next year with job growth expected to continue and inflation already pushing beyond comfortable levels.

Fed Vice Chair Richard Clarida said that while the Fed remains “a ways away from considering raising interest rates,” if his current outlook for the economy proves correct then the “necessary conditions for raising the target range for the federal funds rate will have been met by year-end 2022.”

His remarks come as the Fed shifts attention towards a possible clash between its hope to drive jobs as high as possible, and its concern that inflation is already running too fast.

Inflation to date already presents “much more than a ‘moderate’ overshoot of our 2% longer-run inflation objective, and I would not consider a repeat performance next year a policy success,” Clarida said.

He said economic growth should drive the unemployment rate to 3.8% by the end of next year, and “eliminate the 4.2 million ’employment gap’ relative to” the months before the pandemic.

At that point an interest rate path similar to the one laid out by Fed officials in September would “be entirely consistent” with the Fed’s new framework for hitting its 2% inflation target and reaching “maximum employment,” Clarida said in remarks prepared for presentation at the Brookings Institution.

That rate “dot plot” showed 18 Fed officials evenly split over the need to raise rates next year, with a majority showing rates rising more steadily in 2023 and 2024.

In separate remarks St. Louis Federal Reserve bank president James Bullard repeated his outlook that the Fed will need to raise rates twice next year — with U.S. job markets already so tight it is adding to inflation through growing wage and compensation costs.

“We are going to see downward pressure on the unemployment rate and we are going to continue to see a very hot jobs market with compensation rising,” Bullard said on Fox Business Network. “We’ve got quite a bit of inflation here…we definitely want to see that come down closer to our inflation target.”

“If inflation is more persistent than we are saying right now, then I think we may have to take a little sooner action in order to keep inflation under control,” Bullard .

Two other Federal Reserve bank presidents are due to speak later in the day.

(Reporting by Howard Schneider and Ann Saphir; Editing by Mark Potter and Andrea Ricci)

U.S. companies hire more workers; signs labor crunch may be easing

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth accelerated in June, offering tentative signs that a worker shortage could be starting to ease as companies raise wages and offer incentives to entice millions of unemployed Americans sitting at home.

The Labor Department’s closely watched employment report on Friday also showed just over 150,000 people entered the labor force last month. The report suggested the economy ended the second quarter with strong growth momentum, following a reopening made possible by vaccinations against COVID-19.

Still, employment gains remained less than the million or more per month that economists and others had been forecasting at the beginning of the year.

“This may be a sign that some of the temporary labor shortages holding back the employment recovery are starting to ease,” said Andrew Hunter, a senior U.S. economist at Capital Economics.

Nonfarm payrolls increased by 850,000 jobs last month after rising 583,000 in May. That left employment 6.8 million jobs below its peak in February 2020. Economists polled by Reuters had forecast payrolls advancing by 700,000 jobs. There are a record 9.3 million job openings.

The leisure and hospitality industry added 343,000 jobs, accounting for 40% of the employment gains in June. More than 150 million people are fully immunized, leading to pandemic-related restrictions on businesses and mask mandates being lifted. Government employment jumped by 188,000 jobs, driven by state and local government education. End of school year layoffs were fewer relative to the previous year.

Manufacturing added a modest 15,000 jobs. Factories are struggling with rampant worker shortages as well as scarce raw materials, which are forcing some to cut production.

Construction payrolls contracted again last month. Though the sector remains supported by robust demand for housing, expensive lumber is hampering homebuilding.

Politicians, businesses and some economists have blamed enhanced unemployment benefits, including a $300 weekly check from the government, for the labor crunch. Lack of affordable child care and fears of contracting the coronavirus have also been blamed for keeping workers, mostly women, at home.

There have also been pandemic-related retirements as well as career changes. Economists generally expect the labor supply squeeze to ease in the fall as schools reopen and the government-funded unemployment benefits lapse but caution many unemployed will probably never return to work.

Record-high stock prices and surging home values have also encouraged early retirements.

U.S. stocks opened higher on the data. The dollar fell against a basket of currencies. U.S. Treasury prices rose.

WAGES RISING

Average hourly earnings rose 0.3% last month after gaining 0.4% in May. That raised the year-on-year increase in wages to 3.6% from 1.9% in May. Annual wage growth was in part flattered by so-called base effects following a big drop last June.

According to job search engine Indeed, 4.1% of jobs postings advertised hiring incentives through the seven days ending June 18, more than double the 1.8% share in the week ending July 1, 2020. The incentives, which included signing bonuses, retention bonuses or one-time cash payments on being hired, ranged from as low as $100 to as high as $30,000 in the month ended June 18.

Some restaurant jobs are paying as much as $27 per hour plus tips, according to postings on Poachedjobs.com, a national job board for the restaurant/hospitality industry. The federal minimum wage is $7.25 per hour, but is higher in some states.

With employment not expected to return to its pre-pandemic level until sometime in 2022, rising wages are unlikely to worry Federal Reserve officials even as inflation is heating up because of supply constraints. Fed Chair Jerome Powell has repeatedly stated he expects high inflation will be transitory.

The U.S. central bank last month opened talks on how to end its crisis-era massive bond-buying.

Though the unemployment rate rose to 5.9% from 5.8% in May, that was because 151,000 people entered the labor force. The jobless rate continued to be understated by people misclassifying themselves as being “employed but absent from work.” Without this misclassification, the unemployment rate would have been 6.1% in June.

(Reporting by Lucia Mutikani; Editing by Dan Burns, Chizu Nomiyama and Andrea Ricci)

U.S. unemployment rate falls to 3.5%; job growth steady

By Lucia Mutikani

WASHINGTON, (Reuters) – U.S. job growth increased moderately in September, with the unemployment rate dropping to near a 50-year low of 3.5%, assuaging financial market concerns that the slowing economy was on the brink of a recession amid lingering trade tensions.

The Labor Department’s closely watched monthly employment report on Friday, however, showed wage growth stagnating and manufacturing payrolls declining for the first time in six months. The retail sector also continued to shed jobs.

The report came on the heels of a string of weak economic reports, including a plunge in manufacturing activity to more than a 10-year low in September and a sharp slowdown in services industry growth to levels last seen in 2016, that heightened fears the economy was flirting with a recession.

With signs that the Trump administration’s 15-month trade war with China is spilling over to the broader economy, continued labor market strength is a critical buffer against an economic downturn. The trade war has eroded business confidence, sinking investment and manufacturing.

Nonfarm payrolls increased by 136,000 jobs last month, the government said. August data was revised to show 168,000 jobs created instead of the previously reported 130,000 positions.

The initial August job count was probably held back by a seasonal quirk related to students leaving their summer jobs and returning to school. Economists polled by Reuters had forecast payrolls would increase by 145,000 jobs in September.

U.S. stock index futures pared losses after the release of the data and later moved into positive territory. U.S. Treasury yields jumped and the dollar trimmed losses against the yen and euro. (Full Story)

Regardless of the continued moderate employment growth and sharp drop in the jobless rate, economists expect the Federal Reserve to cut interest rates at least one more time this year, given the trade policy uncertainty.

Washington announced this week tariffs on aircraft, other industrial products and agricultural products from the European Union as part of a World Trade Organization penalty award in a long-running aircraft subsidy case. Trade experts expect the EU will impose tariffs on U.S. goods next year over state subsidies for Boeing BA.N.

The U.S. central bank cut rates last month after reducing borrowing costs in July for the first time since 2008, to keep the longest economic expansion in history, now in its 11th year, on track. Growth estimates for the third quarter range from as low as a 1.3% annualized rate to as high as a 1.9% pace. The economy grew at a 2.0% pace in the second quarter, slowing from a 3.1% rate in the January-March period.

STRONG GOVERNMENT HIRING

Steady job growth last month came despite the Institute for Supply Management’s (ISM) measure of manufacturing employment tumbling to more than a 3-1/2-year low. In September, the ISM’s gauge of services industry employment fell to its lowest reading since February 2014.

While September’s job gains were below the monthly average of 161,000 this year, they were still above the roughly 100,000 needed each month to keep up with growth in the working-age population. The two-tenths of a percentage point drop in the unemployment rate from 3.7% in August pushed it to its lowest level since December 1969.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, declined to 6.9%, the lowest level since December 2000, from 7.2% in August.

Despite the tight labor market, average hourly earnings were unchanged last month after advancing 0.4% in August. That lowered the annual increase in wages to 2.9% from 3.2% in August. The average workweek was unchanged at 34.4 hours.

Hiring is slowing across all sectors, with the exception of government, which is being boosted by state and local government recruitment.

Private payrolls increased by 114,000 jobs in September after rising by 122,000 in August. Manufacturing shed 2,000 jobs last month, the first decline in factory payrolls since March, after hiring 2,000 workers in August.

Factory employment growth has slowed from last year’s brisk pace. Manufacturing has ironically borne the brunt of the Trump administration’s trade war, which the White House has argued is intended to boost the sector.

Last month’s decline in manufacturing payrolls was led by the automotive sector, which lost 4,100 jobs. There were also job losses in machinery, fabricated metals products and primary metal industries.

Construction employment increased by 7,000 jobs last month after rising by 4,000 in August. Retail payrolls dropped by 11,400 jobs, shedding employment for an eight straight month.

Government employment increased by 22,000 jobs in September after surging by 46,000 in August. Hiring was boosted by state and local governments. Only 1,000 workers were hired last month for the 2020 Census. Government payrolls have increased by 147,000 over the year, driven by local governments.

((Reporting by Lucia Mutikani; Editing by Sandra Maler and Paul Simao))

U.S. hiring slows; shorter factory workweek a red flag

FILE PHOTO: An assembly line worker works on the production line at Renegade RV manufacturing plant in Bristol, Indiana, U.S., April 16, 2019. REUTERS/Tim Aeppel

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth slowed in July and manufacturers slashed hours for workers, which together with an escalation in trade tensions between the United States and China could give the Federal Reserve ammunition to cut interest rates again next month.

The Labor Department’s closely watched monthly employment report on Friday came a day after President Donald Trump announced an additional 10% tariff on $300 billion worth of Chinese imports starting Sept. 1, a move that led financial markets to fully price in a rate cut in September.

The U.S. central bank on Wednesday cut its short-term interest rate for the first time since 2008. Fed Chairman Jerome Powell described the widely anticipated 25-basis-point monetary policy easing as insurance against downside risks to the 10-year old economic expansion, the longest in history, from trade tensions and slowing global growth.

“Fed officials don’t exactly have mud in their eyes after cutting interest rates this week as job growth is slowing with the rest of the world,” said Chris Rupkey, chief economist at MUFG in New York. “We see nothing in today’s report to stop a second rate cut next month.”

Nonfarm payrolls increased by 164,000 jobs last month, the government said. The economy created 41,000 fewer jobs in May and June than previously reported. July’s job gains were in line with economists’ expectations.

Underscoring the moderation in hiring, the average workweek fell to its lowest level in nearly two years in July as manufacturers cut hours for workers. Hours were also reduced in other industries, contributing to the workweek’s drop to 34.3 hours, the fewest since September 2017, from 34.4 hours in June.

“The decline in hours worked suggests that employers may be pulling back more than headline hiring would suggest,” said Andrew Schneider, a U.S. economist at BNP Paribas in New York.

A measure of hours worked, which is a proxy for gross domestic product, fell 0.2% in July, pointing to weak output.

The U.S.-China trade war is taking a toll on manufacturing, with production declining for two straight quarters. Business investment has also been hit, contracting in the second quarter for the first time in more than three years and helping to hold back the economy to a 2.1% annualized growth rate. The economy grew at a 3.1% pace in the first quarter.

The White House’s “America First” policies are also restricting trade flows. A separate report from the Commerce Department on Friday showed sharp declines in both imports and exports in June, leading a 0.3% dip in the trade deficit to $55.2 billion during the month.

Job gains over the last three months averaged 140,000 per month, the fewest in nearly two years, compared to 223,000 in 2018. Economists say it is unclear whether the loss of momentum in hiring was due to ebbing demand for labor or a shortage of qualified workers.

Still, the pace of job gains remains well above the roughly 100,000 needed per month to keep up with growth in the working-age population. The unemployment rate was unchanged at 3.7% in July as 370,000 people entered the labor force.

Despite the lowest jobless rate in nearly 50 years, wage gains remain moderate, contributing to a tame inflation environment, which could be supportive of a rate cut at the Fed’s Sept. 17-18 policy meeting.

Inflation has undershot the central bank’s 2% target this year, rising 1.6% on a year-on-year basis in June after a 1.5% gain in May. Average hourly earnings rose 8 cents, or 0.3%, in July, after the same increase in June. That lifted the annual increase in wages to 3.2% in July from 3.1% in June.

Financial markets have fully priced in a rate cut in September and the chances for further easing in December have increased, according to CME Group’s FedWatch tool.

The dollar <.DXY> was trading lower against a basket of currencies, while U.S. Treasury prices rose. Stocks on Wall Street tumbled to a one-month low.

ECONOMY COOLING

Even with the step-down in employment growth and moderate wage gains, the labor market is supporting the economy as the stimulus from last year’s $1.5 trillion tax cut package fades. The economy is expected to grow around 2.5% this year.

There was some encouraging news on the jobs market. The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, rose to 63.0% in July from 62.9% in June.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, fell two-tenths of a percentage point to 7.0% last month, the lowest level since December 2000.

The moderation in hiring was led by construction, which increased payrolls by 4,000 jobs after creating 18,000 positions in June.

Manufacturing employment rose by 16,000 jobs after advancing by 12,000 in June. The strong gains are at odds with weak factory activity. A survey on Thursday showed manufacturing employment hit its lowest level since November 2016 in July.

The sector, which accounts for more than 12% of the U.S. economy, is also battling an inventory bulge and design problems at aerospace giant Boeing Co <BA.N>. The manufacturing workweek dropped 0.3 hour to 40.4 hours, the lowest since November 2011. Factory overtime fell by 0.2 hour to 3.2 hours.

“A prolonged drop in hours worked signals that businesses may reduce hiring, with layoffs and cutbacks in private spending to potentially follow, said Beth Ann Bovino, U.S. chief economist at S&P Global Ratings in New York.

Government employment increased by 16,000 jobs in July, boosted by local government hiring, adding to June’s gain of 14,000. Professional and business services employment rose by 38,000 jobs last month.

There were also increases in healthcare, leisure and hospitality, financial activities and wholesale trade employment. But retail payrolls dropped by 3,600 jobs, declining for a sixth straight month.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Graphic: America’s economy and wages are cooling but not its female workforce

A female construction worker stands outside a construction site in Manhattan, New York, U.S., October 3, 2018. REUTERS/Shannon Stapleton

By Jason Lange

WASHINGTON (Reuters) – Data released on Friday showed a return to strong job growth in the United States, allaying some fears the U.S. economy is on a short path to recession. But the data also reinforced the view that economic growth is slowing.

Here are five take-aways from a report by the U.S. Labor Department on U.S. employment during June.

SLOWING GROWTH

Every month the Labor Department surveys payrolls in the private sector to calculate how many hours employees across the nation worked. Seen as a proxy for economic growth, this index of the national work effort grew 0.2% in June, a rate near the muted gains clocked in recent months. That suggests the U.S. economy, which grew at a 3.1% annual rate in the first quarter of this year, could be cooling.

COOLER WAGE GROWTH?

Growth in private sector average hourly earnings accelerated throughout 2018 and through February of this year, when year-over-year growth hit the strongest rate since 2009 at 3.4%. June’s growth rate, however, was a more modest 3.1%. It is probably too early to tell if there has been a break in the upward trend.

Average earnings graphic

WAGE LAGGARDS

The manufacturing sector added 17,000 jobs in June after several months of weak growth or outright decline. Wage growth in the factory sector, however, has underperformed the national average. Wage growth has also been lower in the education and health jobs category tracked by the Labor Department.

leaders_laggards: https://tmsnrt.rs/2FUH8hw

LABOR FORCE INCREASE

A bright spot for the U.S. economy over the last few years has been the increase in the share of the population that either has a job or is looking for one. This so-called labor force participation rate ticked slightly higher in June, both for a key demographic of people of prime working age and for the general population. But the rate for prime-age workers has been mostly falling since January. This suggests the economy might be running lower on its supply of people available to work, which could depress future job growth.

participation rate graphic

WOMEN LEAD

In June, the participation rate fell for men of prime working age, while it rose for women. This is in line with the trend over the last few years. Indeed, the share of men who have jobs or are looking for one was slightly lower in June than it was in January 2017.

Women lead graphic 

(Reporting by Jason Lange; Editing by Dan Grebler)

Weak U.S. employment report casts pall over economy

FILE PHOTO: Brochures are displayed for job seekers at the Construction Careers Now! hiring event in Denver, Colorado U.S. August 2, 2017. REUTERS/Rick Wilking/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth slowed sharply in May and wages rose less than expected, raising fears that a loss of momentum in economic activity could be spreading to the labor market, which could put pressure on the Federal Reserve to cut interest rates this year.

The broad cool-off in hiring reported by the Labor Department on Friday was even before a recent escalation in trade tensions between the United States and two of its major trading partners, China and Mexico. Analysts have warned the trade fights could undermine the economy, which will celebrate 10 years of expansion next month, the longest on record.

Adding a sting to the closely watched employment report, the economy created far fewer jobs in March and April than previously reported.

The economy thus far has been largely resilient to the trade war with China. President Donald Trump in early May slapped additional tariffs of up to 25% on $200 billion of Chinese goods, which prompted retaliation by Beijing.

Last week, Trump said he would impose a tariff on all goods from Mexico in a bid to force authorities in that country to stop immigrants from Central America from crossing the border into the United States. Talks are ongoing to prevent the duties from kicking in at 5% on June 10.

Fed Chairman Jerome Powell said on Tuesday the central bank was closely monitoring the implications of the trade tensions on the economy and would “act as appropriate to sustain the expansion.”

“Today’s report makes a cut more likely, and supports our view that the trade tensions will ultimately slow growth enough for the Fed to respond in September and December with cuts,” said Joseph Song, an economist at Bank of America Merrill Lynch in New York.

Nonfarm payrolls increased by 75,000 jobs last month, the government said in its closely watched employment report, falling below the roughly 100,000 needed per month to keep up with growth in the working-age population.

Economists polled by Reuters had forecast payrolls rising by 185,000 jobs last month. Job growth in March and April was revised down by 75,000.

In the wake of the weak report financial markets priced in a rate cut as early as July and two more later this year. U.S. Treasury prices rallied, while the dollar dropped against a basket of currencies. Stocks on Wall Street were trading higher.

May’s disappointing job growth was flagged by a report on Wednesday from payrolls processing firm ADP showing the smallest gain in private payrolls in nine years last month. Another report this week showed a drop in online ads by businesses looking for help.

Last month’s slowdown in job gains, however, probably understates the health of the labor market as measures such as weekly applications for unemployment benefits and the Institute for Supply Management’s services employment gauge have suggested underlying strength.

WORKER SHORTAGES

Some of the weakness in hiring last month could be the result of worker shortages, especially in the construction, transportation and manufacturing sectors.

Monthly wage growth remained moderate in May, with average hourly earnings increasing six cents, or 0.2% following a similar gain in April. That lowered the annual increase in wages to 3.1% from 3.2% in April. The average workweek was unchanged at 34.4 hours last month.

The moderation in wage gains, if sustained, could cast doubts on the Fed’s optimism that inflation would return to the U.S. central bank’s 2% target.

The tepid employment report added to soft data on consumer spending, business investment, manufacturing and homes sales in suggesting the economy was losing momentum in the second quarter following a temporary boost from exports, inventory accumulation and defense spending. Growth is cooling as the massive stimulus from last year’s tax cuts and spending increases fades.

The Atlanta Fed is forecasting gross domestic product rising at a 1.5% annualized rate in the second quarter. The economy grew at a 3.1% pace in the first quarter.

The unemployment rate remained near a 50-year low of 3.6% in May. A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, dropped two-tenths of a percentage point to 7.1% last month, the lowest since December 2000.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, was unchanged at 62.8% last month.

Hiring slowed across all sectors in May. Manufacturing payrolls increased by 3,000 last month, after gaining 5,000 positions in April. The sector is struggling with an inventory overhang that has resulted in businesses placing fewer orders at factories.

Manufacturing payrolls will be watched closely for signs of any fallout from the trade tensions. Factory output has weakened and sentiment dropped to a 31-month low in May, with manufacturers worried mostly about trade.

Employers in the construction sector hired 4,000 workers in May after adding 30,000 jobs to payrolls in April. Leisure and hospitality sector payrolls increased by 26,000 jobs last month.

Professional and business services employment rose by 33,000. Transportation and warehousing payrolls fell as did retail employment. Government shed 15,000 jobs, the most since January 2018.

(Reporting by Lucia Mutikani, Editing by Andrea Ricci)

U.S. job growth surges; unemployment rate drops to 3.6 percent

FILE PHOTO: Job seekers and recruiters gather at TechFair in Los Angeles, California, U.S. March 8, 2018. REUTERS/Monica Almeida -/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth surged in April and the unemployment rate dropped to a more than 49-year low of 3.6 percent, pointing to sustained strength in economic activity even as last year’s massive fiscal stimulus fades.

The Labor Department’s closely watched monthly employment report on Friday, however, showed steady wage gains last month, consistent with moderate inflation. The decline in the unemployment rate to the lowest level since December 1969 was because people left the labor force, suggesting some slack in the jobs market remains.

The report was broadly supportive of the Federal Reserve’s decision on Wednesday to keep interest rates unchanged and signal little desire to adjust monetary policy anytime soon. Fed Chair Jerome Powell described the economy and job growth as “a bit stronger than we anticipated” and inflation “somewhat weaker.”

“Employment gains are strong enough to dispel any immediate concerns over the health of the economy, while wage gains are not strong enough to force the Federal Reserve&rsquo;s hand to tighten the policy stance,” said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

Nonfarm payrolls increased by 263,000 jobs last month, amid gains in hiring nearly across all sectors. The economy created 16,000 more jobs in February and March than previously reported. Economists polled by Reuters had forecast nonfarm payrolls rising by 185,000 jobs last month.

The strong economy, especially the labor market, could boost President Donald Trump’s re-election hopes next year. Trump has touted the economy as being one of the big wins of his first term in office. The economy will celebrate 10 years of expansion in July, the longest on record.

Job growth is well above the roughly 100,000 needed per month to keep up with growth in the working-age population.

The second month of strong job growth was further evidence that February’s paltry 56,000 increase in jobs was an aberration.

It also effectively put to rest concerns about a recession and diminished expectations of an interest rate cut this year that had been fanned by a brief inversion of the U.S. Treasury yield curve in March.

Hiring remains strong, despite anecdotal evidence of worker shortages in the transportation, manufacturing and construction industries, suggesting there is still some spare capacity in the labor market.

Steadily rising wages have on balance been keeping workers in the labor force and drawing back those who had dropped out. Average hourly earnings rose six cents, or 0.2 percent in April after rising by the same margin in March. That kept the annual increase in wages at 3.2 percent. Workers put in fewer hours in April. The average workweek fell to 34.4 hours from 34.5 hours.

Though wage growth is not strong enough to drive up inflation, it is seen as sufficient to underpin economic growth as the stimulus from last year’s $1.5 trillion tax cut wanes.

The economy grew at a 3.2 percent annualized rate in the first quarter, driven by a surge in exports and inventories, quickening from the October-December period’s 2.2 percent pace.

The dollar dipped versus a basket of currencies after the employment report, while U.S. Treasury yields were marginally lower.

PEOPLE LEFT LABOR FORCE

The two-tenths of a percentage point drop in the unemployment rate from 3.8 percent in March was because 490,000 people left the labor force in April. The jobless rate is now below the 3.7 percent that Fed officials project it will be by the end of the year.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, was unchanged at 7.3 percent in April.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell to 62.8 percent in April from 63.0 percent in March. The participation rate hit a more than five-year high of 63.2 percent in January.

Some economists expect job growth to slow this year as fewer workers become available, which will push up wages and lift inflation back to the Fed’s 2 percent target. An inflation measure tracked by the U.S. central bank increased 1.6 percent in the year to March, the smallest gain in 14 months, from 1.7 percent in February.

Employment at construction sites increased by 33,000 jobs in April, rising for a second straight month. Manufacturing sector payrolls rebounded by 4,000 jobs after being unchanged in March.

The industry is being pressured by layoffs in the automobile sector as assembly plants try to cope with declining sales and an inventory overhang.

Leisure and hospitality sector payrolls increased by 34,000 jobs last month. Professional and business services employment added 76,000 jobs last month. There were increases in healthcare, transportation and warehousing employment, as well as financial activities.

But retail payrolls fell by 12,000 jobs in April, declining for a third straight month. Temporary help, a harbinger for future hiring, rebounded last month after dropping in March.

Government payrolls increased by 27,000 in April, likely driven by early hiring for the 2020 Census.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. firms hire 275,000 workers in April, most nine months: ADP

People attend the Executive Branch Job Fair hosted by the Conservative Partnership Institute at the Dirksen Senate Office Building in Washington, U.S., June 15, 2018. REUTERS/Toya Sarno Jordan

(Reuters) – U.S. private employers added 275,000 jobs in April, well above economists’ expectations and the most since last July, supporting the view of a solid domestic labor market, a report by a payrolls processor showed on Wednesday.

April’s robust figure might be overstating the strength of the jobs sector due to technical factors, said Mark Zandi, chief economist at Moody’s Analytics which jointly developed the employment report with ADP.

Job growth last month was likely in the 175,000 to 200,000 range, which is the current consensus range among economists, Zandi said on a conference call with reporters.

Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 180,000 jobs, with estimates ranging from 141,000 to 225,000.

Private payroll gains in the month earlier were revised up to 151,000 from an originally reported 129,000 increase.

While the overall labor market is “fine,” it is slowing, Zandi said.

The ADP figures come ahead of the U.S. Labor Department’s more comprehensive non-farm payrolls report at 8:30 a.m. (1230 GMT) on Friday, which includes both public and private-sector employment.

Economists polled by Reuters are looking for U.S. private payroll employment to have grown by 180,000 jobs in April, down from 182,000 the month before. Total non-farm employment is expected to have changed by 185,000.

The unemployment rate is forecast to stay steady at the 3.8 percent recorded a month earlier.

GRAPHIC: ADP vs. the U.S. Labor Department payrolls data – http://tmsnrt.rs/2eRF4KM

(Reporting by Richard Leong and Dan Burns; Editing by Chizu Nomiyama)

U.S. job openings hit 11-month low; quits rate stagnates

FILE PHOTO: A "Help Wanted" sign sits in the window of a shop in Harvard Square in Cambridge, Massachusetts, U.S., February 11, 2019. REUTERS/Brian Snyder/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job openings dropped to an 11-month low in February and hiring decreased, which could partially explain a sharp slowdown in job growth during that month.

Still, the labor market remains a pillar of support for the economy amid signs that activity was easing because of the fading boost from a $1.5 trillion tax cut package and the effects of interest rate increases over the last few years. The economy is also facing headwinds from slowing global growth and the United States’ trade war with China.

“The February job openings data reinforced that the labor market weakened in February but there isn’t any cause for concern,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

Job openings, a measure of labor demand, tumbled by 538,000 to a seasonally adjusted 7.1 million, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS, report on Tuesday. The drop was the biggest since August 2015. The level was the lowest since March 2018.

Vacancies in the accommodation and food services industry fell by 103,000 jobs in February. There were 72,000 fewer job openings in the real estate and rental and leasing sector. Job openings in the transportation, warehousing and utility sector dropped by 66,000.

Nonfarm payrolls increased by only 33,000 jobs in February, the fewest since September 2017. The near-stall in job gains was partially blamed on colder weather and also viewed as payback after robust increases in December and January.

Job growth picked up in March, with the economy creating 196,000 positions, the government reported last Friday.

WORKERS STILL SCARCE

The drop in job openings in February likely does not change the theme of labor shortages in the economy. A survey of small businesses published on Tuesday found that just over a fifth of owners reported difficulties finding qualified workers as their “single most important business problem” in March.

According to the survey from the NFIB, 39 percent of small business owners reported job openings they could not fill in March. Thirty-three percent said they had openings for skilled workers and 14 percent have vacancies for unskilled labor.

Economists expect monthly job growth to average roughly 150,000 this year, stepping down from 223,000 in 2018.

“There are still millions of help wanted signs out there in the country so we hesitate to revise our outlook for the labor market overall,” said Chris Rupkey, chief economist at MUFG in New York.

The dive in job openings in February pushed down the vacancies rate to 4.5 percent from 4.8 percent in January. Hiring fell to 5.7 million in February from 5.8 million in the prior month. The decrease in hiring was led by the construction sector, where hiring fell by 73,000.

Hiring in the nondurable goods manufacturing industry dropped by 33,000 in February. Hiring by state and local government education departments fell 22,000.

The number of workers voluntarily quitting their jobs was little changed at 3.5 million in February, keeping the quits rate at 2.3 percent for a ninth straight month.

The quits rate is viewed by policymakers and economists as a measure of job market confidence. The worker reluctance to switch jobs is despite the tight labor market conditions that are steadily driving up wages.

“This is not as many quits as you would expect in such a tight labor market, when workers are in higher demand,” said Nick Bunker, an economist at Indeed Hiring Lab. “Though perhaps this isn’t surprising in the short term given that the ratio of unemployed workers to job openings has been rising.”

Layoffs increased in February, lifting the layoffs rate to 1.2 percent from 1.1 percent in January. There were increases in layoffs in the professional and businesses services, and healthcare and social assistance sectors in February.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

U.S. weekly jobless claims unexpectedly fall

FILE PHOTO: A man looks over employment opportunities at a jobs center in San Francisco, California, in this February 4, 2010 file photo. REUTERS/Robert Galbraith/Files

WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits unexpectedly fell last week, suggesting labor market conditions remained solid, despite slowing job growth.

Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 211,000 for the week ended March 23, the Labor Department said on Thursday. Data for the prior week was revised to show 5,000 fewer applications received than previously reported.

Economists polled by Reuters had forecast claims rising to 225,000 in the latest week. The Labor Department said no states were estimated. The government revised the claims data and the so-called seasonal factors from 2014 through 2018. It also updated the seasonal factor for 2019.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 3,250 to 217,250 last week.

Job growth has slowed after last year’s robust gain. The pace, however, remains more than enough to keep up with growth in the working age population. The unemployment rate is currently at 3.8 percent. The moderation in job growth also reflecting a shortage of workers and softening economic growth as the stimulus from a $1.5 trillion tax cut package fades.

Thursday’s claims report showed the number of people receiving benefits after an initial week of aid rose 13,000 to 1.76 million for the week ended March 16. The four-week moving average of the so-called continuing claims fell 4,250 to 1.75 million.

The continuing claims data covered the survey week for March’s unemployment rate. The four-week average of continuing claims rose slightly between the February and March survey periods, suggesting little change in the unemployment rate.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)