Washington, DC, Jun. 4--Employers hired workers at a rapid pace for a third month in a row, validating Wall Street's view that the job market finally is healthy enough to permit the Federal Reserve to start raising interest rates for the first time since 2000.
Nonfarm business payrolls grew by a net 248,000 jobs in May, raising this year's monthly average to 238,000, the fastest pace in four years, the Labor Department reported Friday. That marked the third straight month that employers have added more than the 150,000 jobs economists say is necessary to keep the job market stable.
Payroll-growth figures for March and April, which were already considered strong by many economists, were revised even higher. Employers added 74,000 more jobs than previously thought during those two months. The surge in job creation drew previously discouraged workers back into the civilian labor force, expanding it by 233,000 to 146.9 million. The unemployment rate, as a result, held steady at 5.6%.
Economists had expected payrolls to grow by 215,000, and for unemployment to remain unchanged at 5.6%, according to a survey by Dow Jones Newswires and CNBC. Many economists now expect the economy to generate about 200,000 jobs a month for the remainder of 2004--a pace would go a long way toward fulfilling the White House's once-derided forecast of a 2.6 million increase in jobs this year.
The Labor Department revised its estimates of job growth for March and April, saying employers added 353,000 jobs in March and 346,000 in April. The initial estimates had shown a 337,000 increase in March and a 288,000 increase in April.
Job creation was "widespread" for a third consecutive month, the Labor Department said. Employers expanded jobs in all major sectors of the labor market except government, which cut 27,000 jobs.
The service-producing industry added 176,000 jobs. That included a 64,000 increase in professional and business-services jobs, which include temporary-help jobs. The manufacturing industry added 32,000 jobs, marking the largest increase in nearly six years. The construction industry added 37,000 jobs, nearly twice as many as in April.
The jobs growth coincided with a small increase in average hourly earnings, which rose five cents to $15.64 in May. Over the last year, average hourly earnings have risen 2.2%. The average work week held steady at 33 hours and 48 minutes.
Despite the strong jobs growth, 8.2 million people remained unemployed in May, the Labor Department said. The number of people who have been jobless for 27 weeks or more remained steady at 1.8 million.
