Unemployment drops to 5.4 percent in April

The U.S. economy created 223,000 jobs in April as the unemployment rate fell to 5.4 percent.
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The U.S. economy created 223,000 jobs in April as the unemployment rate fell to 5.4 percent, the lowest rate since May 2008.

Job gains occurred in professional and business services, health care and construction, the U.S. Department of Labor reported today.

The government revised its March report to show that 85,000 jobs were created, not the 126,000 that were initially reported for that month.

“The pace of employment is quite encouraging,” Gregory Daco, head of U.S. macroeconomics at Oxford Economics USA Inc., told Bloomberg. “Wage growth is accelerating, but it’s quite gradual, more gradual than we would expect in a market where the unemployment rate is 5.4 percent.”

Reuters said the employment report, which showed steady gains in hourly earnings, suggested underlying strength in the economy at the start of the second quarter after growth almost braked to a halt in the first three months of the year.

The economy wobbled in the first quarter and even may have contracted as it was buffeted by bad weather, port disruptions, a strong dollar and deep spending cuts by energy firms.

"We may see a further acceleration in employment growth going into the summer, but this isn't the sort of unequivocal rebound that would give the Fed the confidence to begin tightening monetary policy before Independence Day," Paul Ashworth, chief U.S. economist at Capital Economics in Toronto, told Reuters, referring to the July 4 holiday.

The government said the number of people who were unemployed for less than five weeks increased by 241,000, to 2.7 million, in April. The number of long-term unemployed — people who have been jobless for 27 weeks or longer — changed little, at 2.5 million, accounting for 29 percent of the unemployed. During the past 12 months the number of long-term unemployed has decreased by 888,000. The government said the civilian labor force participation rate (62.8 percent) changed little in April. Since April of last year, the participation rate has remained within a narrow range of 62.7 percent to 62.9 percent. The number of people who were employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed, at 6.6 million in April, but is down by 880,000 from a year earlier, the government said. These people, who would have preferred full-time employment, were working part time because their hours had been cut back or they were unable to find a full-time job.

In April, 2.1 million people were marginally attached to the labor force, little changed during the year, the government said. Those people were not in the labor force, wanted and were available for work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work during the four weeks that preceded the survey.

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