Payrolls grow smallest amount since Oct. - East Valley Tribune: Business

Payrolls grow smallest amount since Oct.

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Posted: Friday, May 5, 2006 6:16 am | Updated: 2:56 pm, Fri Oct 7, 2011.

WASHINGTON - New hiring slowed significantly in April as employers added just 138,000 people to their payrolls, the slowest pace of job growth in six months. The overall unemployment rate held steady at 4.7 percent.

The latest snapshot of labor market activity, released by the Labor Department on Friday, also showed a sharp jump in workers' wages, which is sure to raise inflation fears.

Wages grew by 3.8 percent over the last year, the biggest 12-month gain since August 2001.

The 138,000 gain in payrolls was the smallest since October when businesses still reeling from the blows of the Gulf Coast hurricanes added only 37,000 jobs.

The weakness in April's payrolls mostly reflected job losses in retailing. Manufacturers actually added the most number of jobs in nearly two years. Financial firms, professional services, construction and other companies all boosted employment during the month.

The payroll performance in April was weaker than economists were expecting. Before the release of the report, they were predicting a gain of around 200,000 jobs for the month.

Job gains in February and March, meanwhile, turned out to be less than previously estimated. Payrolls grew by 200,000 in each month - a still good showing. The government had reported a gain of 211,000 jobs in March and 225,000 in February.

The report comes as President's Bush standing with the public has deteriorated. Bush's job-approval rating, meanwhile, is now at 33 percent, the lowest in AP-Ipsos polling.

Workers' average hourly earnings stood at $16.61 in April, a big 0.5 percent jump from March. Economists were expecting a more moderate 0.3 percent rise. Over the last 12 months, earnings went up by 3.8 percent, the biggest 12-month gain since August 2001.

Wage improvement is good for workers but a rapid, sustained acceleration would ignite inflation concerns.

To fend off inflation, Federal Reserve Chairman Ben Bernanke and his colleagues are expected to bump up interest rates on May 10 by one-quarter percentage point to 5 percent. After that, some economists believe the Fed will take a break in its two-year rate-raising campaign. Others, however predict the Fed will push rates even higher.

On the payroll front, retailers cut just over 36,000 jobs in April, the most since September. Information companies, including publishers, shed 2,000 jobs during the month.

But other areas were much more robust. Manufacturers boosted payrolls by 19,000, the most in nearly two years. Leisure and hospitality companies added 20,000 jobs. Education and health services posted 35,000 job gains. Professional and business services added 28,000 positions. Financial firms increased employment by 26,000. Construction companies added 10,000 jobs.

The report comes as analysts expect the economy to log slower growth in the April-to-June quarter, predicting it will expand by about 3 percent. Such growth would mark a moderation from the brisk 4.8 percent pace registered in the January-to-March period but would still be considered healthy.

Just how much strength the second quarter shows will be affected by the appetite of businesses and consumers to spend and invest.

So far, they have been holding up under the strain of high energy prices.

Oil prices topped $75 a barrel, a record high in late April. Oil prices, which have been gyrating since then, were hovering below $70 a barrel on Thursday. Gasoline prices have marched higher and are above $3 a gallon in some areas.

Separately, consumer confidence sank to a seven-month low as sticker shock from rising gasoline prices made Americans anxious about the economy's prospects and the strain on their own budgets.

The RBC CASH Index, based on results from the international polling firm Ipsos, showed confidence at 67.1 in early May. That marked a big deterioration from 89.4 in April.

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