Another strong month of hiring should put to rest fears that the U.S. economy is downshifting _ and it suggests that there might finally be a head of steam building.
Employers added 217,000 non-farm payroll jobs in May, the Labor Department said Friday, adding that the unemployment rate held steady at 6.3 percent. With that, the economy surpassed the high-water mark for the number of Americans employed before the Great Recession, passing an important albeit dubious milestone.
On top of the positive jobs report, the ratings agency Standard & Poor’s said Friday that it had reaffirmed its AA-plus credit rating on the United States but was prepared to restore the gold-plated AAA rating if it saw continued bipartisan efforts in Washington to address long-term fiscal challenges.
S&P in 2011 downgraded its rating of U.S. creditworthiness for the first time, concerned about political stalemates, threats of a voluntary debt default and mounting budget deficits. The loss of the coveted top rating had little practical effect but it tarnished the image of the world’s most modern economy.
Friday’s jobs report was the first since the government reported that the economy shrank 1 percent in the first three months of the year. A weak jobs report would have rekindled fears of a stumbling economy.
Employers had added 225,000 jobs in April, setting expectations higher too. Soft readings just this week on employment had economists ratcheting down their forecasts, so the May report exceeded predictions.
“Job growth is slowly but steadily improving,” said Mark Zandi, the chief economist of Moody’s Analytics. “Unemployment and underemployment are still uncomfortably high, but declining. The job gains are increasingly broad-based across industries, regions of the country and pay scales.”
Taken with strong auto sales, improvements in factory orders and other manufacturing indicators, and modest improvements in a host of other economic indicators, the economy appears to be jolting back to life after the winter setback.
“Jobs . . . have increased by an average of more than 200,000 per month so far in 2014, even with the bad weather,” noted Gus Faucher, senior economist for PNC Financial Services in Pittsburgh.
There also are plenty of quiet signs that suggest the economy isn’t as bad as many had feared.
Home sales are sluggish but the construction sector is steadily improving. Construction employment rose by 6,000 in May to 189,000 jobs above May 2013 levels. The sector now employs just over 6 million workers, the highest since June 2009.
The unemployment rate for job seekers who last worked in construction fell to the lowest May level in six years: 8.6 percent, down from 10.8 percent in May 2013 and a high of 20.1 percent in May 2010, according to Ken Simonson, the chief economist for the Associated General Contractors of America.
May also marked the point at which the total of payroll employment has again reached its pre-recession level.
It’s hardly a milestone to celebrate, however, cautioned Heidi Shierholz, a labor economist with the Economic Policy Institute, a liberal research center.
“It is economically meaningless. We still have a big hole in the labor market,” she said, noting that to keep pace with new entrants in the workforce and other changes, the economy would have needed almost twice the jobs. “What we need to get back to pre-recession level conditions is 6.9 million (more) jobs.”
Manufacturers are sympathetic.
“We remain well below our pre-recessionary levels, with employment in the sector roughly 12 percent below where it was at the end of 2009,” said Chad Moutray, the chief economist for the National Association of Manufacturers.
That may be due more to increases in productivity than any lingering problem in the economy. “Manufacturing production is expected to reach its pre-recessionary level at some point this summer,” Moutray said.
The jobless rate held steady in May at 6.3 percent, and most signs of underemployment and stress in the labor markets remained unchanged.
There were still 3.4 million Americans who’ve been out of work for 27 weeks or longer, and 7.3 million Americans who were working part time but desired full-time work.
Job growth in May was powered by better-paying white-collar jobs, with the professional and business services sector adding 55,000 jobs. Leisure and hospitality added 39,000 and the health care sector, which had seen hiring slow down over the past half year, added 33,600 posts.
“Health care and social assistance had a stronger-than-average month, adding 55,000 jobs, as did transportation and warehousing, which added 16,000 jobs,” Jason Furman, the head of the White House’s Council of Economic Advisers, said in his blog. “Job growth in most other industries was squarely within the range observed over the course of the recovery.”