The U.S. economy gained another 248,000 jobs in May, the Labor Department reported today, reinforcing a six-month trend of broad-based growth in employment and adding to pressure on the Federal Reserve to start boosting interest rates.
The unemployment rate was 5.6 percent, unchanged from last month but strikingly down from the 6 percent range where it sat a year ago. The unemployment rate was the same as last month because thousands of workers who were out of the labor force began looking for employment once again, the department said.
President Bush, on a trip to Europe, said he was pleased with the report.
"Today's job report shows that the American economy is strong and it's getting stronger. Two hundred forty eight thousand jobs for last month is good for the American workers," he told reporters while attending a reception in Rome. "It shows that our economy is vital and growing. . . . The policies in place are working; the entrepreneurial spirit is strong; the small business sector of our economy is vibrant. And I'm pleased the American worker is doing their job."
The May increase in payroll employment follows gains of 346,000 in April and 353,000 in March.
The department described the job growth in May as "widespread," with increases in construction, manufacturing and several service-providing industries.
Since August of last year, employment has risen by about 1.4 million, with average monthly growth for this year at a healthy 238,000.
The figures out today exceeded expectations among economists, who had predicted an increase in non-farm payroll of about 225,000 jobs.
"It is safe to say that a vigorous trend of job growth has been cemented with a third consecutive torrid reading," said economist Stephen Stanley, of RBS Greenwich Capital Markets, in a note to clients. "In fact, the economy has now created 1.4 million jobs since last August (who's laughing at Treasury Secretary [John W.] Snow's 2 million jobs prediction now?). There is still a lot of slack in labor markets, but the Fed has seen what it needed to see on employment and can now tighten with confidence that the economy will not wilt at the first sign of higher interest rates."
The Labor Department, in its report, took note of the breadth of the jobs recovery. "In May, construction employment increased by 37,000, with most of the gain occurring in specialty trade contracting and the construction of buildings," the report said. "Since March 2003, the construction industry has added about a quarter-million jobs."
Manufacturing employment grew by 32,000 in May, the report said, the largest monthly boost since August 1998. In fact, manufacturing job growth, stagnant for much of last year, has been accelerating since January, particularly durable goods manufacturing and construction-related manufacturing. Employment also increased in computer and electronic products.
Mining employment continued to rise in May. Since January, the industry has added 18,000 jobs.
In the service-providing sector, professional and business services added 64,000 jobs in May. Employment in temporary help services continued to rise (31,000) and has grown by 299,000 (or 14 percent) since April 2003.
Democrats and Republicans alike agreed the job growth was good news. But that was the extent of their accord.
"What a difference a year makes," said Commerce Secretary Donald Evans, noting the big payroll gains in the past three months. "A wakeup call has been sent that the United States economy is back," he told wire services.
"Today's employment report demonstrates beyond a doubt, the broad-based strength and continuing momentum of the U.S. economy," said Snow, who credited the president's tax cuts for strengthening the economy and spurring job growth.
Allison Dobson, spokeswoman for Democratic presidential candidate John Kerry, said, "Any step forward in the job market is good news for workers, but America is still in the worst job recovery since the Great Depression, with 1.9 million private-sector jobs lost in the Bush presidency."
The report "is welcome news for American workers who are enduring the most prolonged jobs slump since the 1930s," said Rep. Pete Stark of California, the top Democrat on Congress' Joint Economic Committee. "But we still have a jobs deficit, and most of the economic growth we have seen has fattened businesses' balance sheets, not workers' paychecks."
"While we're pleased the country has begun to experience job growth," said AFL-CIO President John Sweeney, "we're still far from where working families need this country to be. The economy is not yet creating enough jobs to keep pace with workers entering the labor force and we're still way behind the employment levels of three and a half years ago.
"We have 1.2 million fewer jobs than when President Bush took office," Sweeney said in a statement, "and the painfully slow recovery has left far too many people out."
Analysts expect the Federal Reserve to move soon, perhaps this month, to raise its benchmark overnight interest rate. Other long-term interest rates that are determined by the financial markets, such as mortgage rates, have started rising in anticipation of the Fed's likely action.
Some Fed critics have said the central bank should have started raising rates already because of the recent rise in inflation.
Consumer prices, excluding volatile food and energy prices, rose 1.7 percent at a seasonally adjusted annual rate in the first quarter, according to a Commerce Department measure tied to GDP that is closely followed by the Fed.
That is a relatively low inflation rate, and within the comfort range of many Fed officials, but the quarterly figure has moved steadily upward since touching a low of 0.8 percent in the April-through-June period of last year.