Friday, June 01, 2007

US job creation stronger than expected

US job creation stronger than expected
By Eoin Callan
Copyright The Financial Times Limited 2007
Published: June 1 2007 15:30 | Last updated: June 1 2007 15:30

The US economy created more jobs than expected last month as the unemployment rate stayed close to a five-year low.

US employers added 157,000 staff to their payrolls following an increase of 80,000 posts the previous month, the department of labour said.

The surprisingly strong job creation is likely to be viewed by the Federal Reserve as welcome support for consumer spending at a time when the housing market is languishing and fuel prices are rising.

The central bank is expecting the economy to gain momentum in the coming months after figures this week showed growth slowed to an anaemic 0.6 per cent.

A separate government report showed personal spending rose in April by 0.5 per cent and that spending also rose more than initially thought the previous month, when there was a gain of 0.4 per cent.

The jobless rate held steady at 4.5 per cent, suggesting a tight labour market and underlining Fed concerns about continued inflation pressures.

A measure of prices watched closely by the central bank increased less than forecast, with a gain of 0.1 per cent.

Economists said the figures would make Fed members less inclined to lower interest rates in the coming months.

Jobs in construction held steady as employment on commercial buildings offset cuts in house-building.

The service industries continued to account for the overwhelming share of job creation, with sectors such as restaurants and banking adding 176,000 staff.

Manufacturers shed 19,000 jobs despite recent signs of a recovery for US factories while the manufacturing working week fell to 41 hours from 41.1 hours and overtime fell slightly.

Workers’ average hourly earnings rose 6 cents, or 0.3 per cent, to bring average weekly earnings to $586 last month from $583 in April.


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