Goshen News, Goshen, IN

Business

June 6, 2014

Employers add 217K jobs

Jobless rate remains at 6.3 percent

(Continued)

Consumer spending has risen at just a 2.2 percent annual rate since 2010, more than a percentage point below the average yearly increase in the two decades before the Great Recession.

"The sluggishness in wages is the weak link that is preventing the U.S. economy from fully expanding its wings," said Gregory Daco, U.S. economist at Oxford Economics.

One reason for the lack of solid pay raises: Many of the jobs added since the recession ended in June 2009 have been in lower-paying industries. A similar pattern was evident in May: Hotels, restaurants and entertainment companies added 39,000 jobs. Retailers gained 12,500. Manufacturers added 10,000 jobs, construction firms 6,000.

Still, the United States has now added more than 200,000 jobs a month for four straight months — the first time that's happened since 1999.

"There's no doubt the rate of job creation has accelerated," said Dan Greenhaus, chief global strategist at BTIG LLC. "But there remains a fair bit of slack in the labor market."

Many economists had predicted late last year that growth would finally accelerate in 2014 from the steady but modest pace that has persisted for the past four years. But the economy actually shrank in the first three months of this year as a blast of cold weather shut down factories and kept consumers away from shopping malls and car dealerships.

The U.S. economy contracted at a 1 percent annual rate in the first quarter, its first decline in three years.

Employers have shrugged off the winter slowdown and have continued to hire. That should help the economy rebound because more jobs mean more paychecks to spend.

Most economists expect annualized growth to reach 3 percent to 3.5 percent in the current second quarter and to top 3 percent for the rest of the year.

Recent economic figures suggest that growth is accelerating.

Auto sales, for example, jumped 11 percent in May to a nine-year high. Some of that increase reflected a pent-up demand after heavy snow during the winter discouraged car buyers. But analysts predict that healthy sales will continue in coming months, bolstered by low auto-loan rates and the rollout of new car models.

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