WASHINGTON – More Americans hunted for jobs in May, and more companies filled them – signs of confidence and resilience for the slow-healing U.S. economy.
The 175,000 jobs employers added last month were the latest evidence that the economy could be poised for stronger growth in the coming months despite tax increases and government spending cuts.
The unemployment rate rose to 7.6 percent from 7.5 percent in April, the Labor Department said Friday.
But that increase was only because more people began looking for work, a healthy sign. About three-quarters of them found jobs.
Investors seemed pleased that the report hit a sweet spot: The job growth showed the U.S. economy’s sturdiness.
Yet the gain was modest enough that many analysts think the Federal Reserve will continue making bond purchases intended to stimulate growth for at least several more months.
The purchases have eased long-term loan rates and lifted stock prices.
The Dow Jones industrial average surged more than 200 points.
Job growth is still a bit weaker than desired, said Russell Price, an economist at Ameriprise Financial.
But the steadiness of the job gains is a testament to the economy’s much improved underlying fundamentals.
The housing market is strengthening, auto sales are up and consumer confidence has reached a five-year peak. Stock prices are near record highs, and the budget deficit has shrunk.
The American economy’s relative strength contrasts with Europe, which is gripped by recession, and Asia, where once-explosive economies are now struggling.
U.S. employers have added an average of 155,000 jobs in the past three months. But the May gain almost exactly matched the average increase of the previous 12 months: 172,000.
Reflecting a recent trend, many of the jobs added in May were lower-paying ones, which aren’t likely to fuel as much consumer spending and economic growth as higher-paying jobs that have disappeared.
Yet many Americans appear more optimistic about their job prospects: 420,000 people started looking for work in May.
As a result, the percentage of Americans 16 and older either working or looking for work rose to 63.4 percent from a 34-year low of 63.3 percent in April.
This is called the labor force participation rate. Higher participation can raise the unemployment rate. That’s because once people without a job start looking for one, they’re counted as unemployed.
Labor force participation has been falling since peaking at 67.3 percent in 2000.
That’s partly the result of baby boomers retiring and dropping out of the workforce.
Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities, thinks an improving job market will lead more Americans to seek jobs. He predicts that the participation rate will level off around 63.5 percent.