Arrow-right Camera
The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Strong hiring seen as sign of confidence

Josh Boak And Christopher Rugaber Associated Press

WASHINGTON – Employers last month delivered a vote of confidence in the U.S. economy.

They added 280,000 jobs – a surprisingly robust total at a time when consumers are hesitant to spend and the economy appears less than fully healthy. Some key industries, from energy to manufacturing, have been struggling. And economic troubles overseas have put investors on edge.

Yet Friday’s report from the Labor Department showed that employers seem confident the economy is regaining its footing after shrinking at the start of the year and that their customer demand will accelerate.

“It’s kind of a strange situation because consumers are getting jobs, and their incomes are improving,” said John Silvia, chief economist at the bank Wells Fargo.

Six years after the worst downturn in more than seven decades officially ended, Silvia said, “We’ve moved beyond the Great Recession.”

Across the economy, employers are betting that steady hiring has begun to drive economic momentum. Home and auto sales are up. Restaurants, sports stadiums, theaters and hotels added 57,000 workers last month in anticipation of summer vacations.

Even the slight rise in unemployment in May, to 5.5 percent from 5.4 percent in April, reflected a positive trend: The rate rose because hundreds of thousands more Americans felt it was a good time to start looking for work. Because not all found jobs right away, they were counted as unemployed, and their numbers raised the jobless rate.

The economy shrank in the January-March quarter at an annual rate of 0.7 percent, its worst showing in a year. Growth is recovering in the current quarter, though it’s expected to reach no more than a modest 2 percent to 2.5 percent annual pace.

Economists say much of the winter slowdown reflected temporary factors that are fading: Harsh winter weather kept many shoppers indoors. A steep drop in oil prices hammered the energy industry, which sharply reduced spending on drilling rigs, steel pipe and other goods. A labor dispute at West Coast ports disrupted exports.

Plus, economists say the government may be having trouble measuring first quarter economic data accurately. The government is reviewing the issue and may adjust its figures in July.

Major U.S. corporations are burdened by the strong dollar, which has made their goods more expensive overseas and cut into export sales and foreign profits. But smaller businesses, which employ a majority of the U.S. workforce, are largely immune to currency swings. And they appear to have stepped up hiring in May more than larger companies did.

Payroll processor ADP says companies with fewer than 50 employees added 122,000 jobs in May – 10 times the number added by companies with more than 500 workers.

Pay increases also have been a missing piece in this recovery. Workers have been getting by on raises barely above inflation. But pay rose at a faster clip in May: 2.3 percent over the past year. This suggests that the 5.5 percent unemployment rate may be leading to the kind of tight job market that generally compels employers to raise wages to attract workers.