Job Growth Strong in May

Unemployment Rate Holds at 5.6 Percent

U.S. businesses added hundreds of thousands of jobs last month, hiring enough new jobseekers to hold the unemployment rate steady at 5.6 percent, the Labor Department reported today.

Employers added 248,000 jobs in May across a wide variety of industries, and the department raised its previous estimates for March and April by a combined 74,000, for an average gain of more than 315,000 jobs in each of the past three months -- a booming pace after six months of weaker job growth.

The figures show that the once-halting economic recovery from the 2001 recession has given way to a healthy expansion that is likely to be self-sustaining, as job growth drives up incomes, which fuels more spending, which begets more hiring, analysts said.

The report is a "very good sign in terms of overall momentum," said William G. Cheney, chief economist at MFC Global Investment Management. "You create that many jobs and people go out and spend the money and it feeds on itself."

The gains show that the economy is growing so strongly that employers can no longer keep up simply by using new technology and management methods to squeeze more efficiency out of their workforces, as they had for the many months after the 2001 recession that were termed a "jobless recovery."

"Businesses simply had to add those workers to meet demand," said Richard Yamarone, director of economic research at Argus Research Corp. Manufacturing, which boosted its payrolls by 32,000 jobs in May, for a fourth consecutive month of gains, is "adding workers like it's a party out there."

Business executives said they feel the shift in the economic tempo and are cautiously increasing their hiring plans. The Business Roundtable said Thursday that 38 percent of the chief executives recently surveyed plan to add to their company payrolls in the next six months, up from 33 percent in March.

"Things have been changing underneath our feet in the past 30 days," said Sean Bisceglia, chief executive of Chicago-based CPRi Inc., a staffing firm for marketing professionals. He said the firm saw a 30 percent increase last month in "temp-to-perm" placements, in which client companies hire a temporary employee from CPRi, with the intention of hiring the worker permanently if things go well.

"Yes, the economy is recovering, but people are still tentative about adding full time staff," Bisceglia said.

Stock prices rose after the employment report was released, on expectations of continued strong economic growth. Bond prices fell, and yields rose, as the report reinforced investor expectations that the Federal Reserve officials will raise their benchmark overnight rate to 1.25 percent from 1 percent when they meet later this month. Rates set by financial markets, such as mortgage rates, already have started rising in anticipation, eroding the value of bonds previously issued at lower rates.