A Labor Department report showed Friday the nation's economy has now recouped all the jobs it lost in the aftermath of the recession as the country added jobs for the ninth consecutive month in May.
The government said the economy created 248,000 non-farm payroll positions during month, helped by the largest gain in manufacturing employment in almost six years.
The gain came after the economy added a revised 346,000 jobs in April, which was originally reported as 288,000 and followed a revised addition of 353,000 positions in March.
Non-farm payroll employment has increased by 1.2 million so far this year, the best five months of job growth since 2000. The economy created nearly 1 million positions over the past three months.
Analysts said the growth since the end of last year provides evidence that Corporate America has regained the confidence that was missing during the jobless recovery that began in November 2001.
The Labor Department said the nation's overall unemployment rate remained unchanged at 5.6 percent.
Economists on Wall Street were expecting the non-farm payrolls to expand by 225,000 positions while the overall unemployment rate was expected to remain unchanged at 5.6 percent.
The report showed for teenagers, unemployment rose to 17.2 percent last month from 16.9 percent. The jobless rate for women fell to 4.8 percent from 5 percent. The jobless rate for men increased to 5.2 percent from 5 percent.
Analysts said the report validated Wall Street's view that the job market finally is healthy enough to permit the Federal Reserve to start raising interest rates for the first time since 2000.
Many economists now expect the economy to generate about 200,000 jobs a month for the remainder of 2004 -- a pace that would go a long way toward fulfilling the White House's once-derided forecast of a 2.6 million increase in jobs this year.
Economists said the end of the "jobless recovery" that has characterized the economy for the last two-and-a-half years all but ensures the Fed will raise interest rates by one-quarter percentage point as early as June 30.
The Fed's key interest rate has stood at a 46-year low of 1 percent for nearly a year because Fed policy makers feared the persistently weak job market could derail the economic recovery.
Most Wall Street economists now expect the Fed to raise the funds rate by a quarter-percentage point to 1.25 percent at its next meeting of policy makers on June 30, and to follow that up with quarter-point increases at each of the next four meetings this year.
But Fed policy makers say their decisions will depend heavily on how the economy is performing, implying they could choose to hold off rate increases if the economy shows any sign of faltering.
May's job growth lifted this year's monthly average to 238,000 positions, the fastest pace in four years, the Labor Department said. The surge in job creation drew previously discouraged workers back into the civilian labor force, expanding it by 233,000 to 146.9 million.
May also marked the third straight month that employers added more than the 150,000 jobs economists say is necessary to keep the job market stable.
The report showed the service-producing industry added 176,000 jobs. That included a 64,000 increase in professional and business-services jobs, which include temporary- help jobs. The service-producing industry added 294,000 jobs in April.
The manufacturing industry added 32,000 jobs, marking the largest increase in nearly six years. The construction industry added 37,000 jobs, nearly twice as many as in April. Payrolls rose 44,000 at education and health services after a 39,000 rise.
The jobs growth coincided with a small increase in average hourly earnings, which rose, 0.3 percent, or 5 cents, to $15.64 in May. Over the last year, average hourly earnings have risen 2.2 percent. The average work week held steady at 33 hours and 48 minutes. Average weekly earnings rose to $528.63 last month from $526.94 in April.
Wall Street was expecting the average work week to inch up to 33.8 hours and average hourly earnings to rise 0.2 percent after rising 0.3 percent a month ago.
Despite the strong jobs growth, 8.2 million people remained unemployed in May, the Labor Department said.
The number of people who have been jobless for 27 weeks or more remained steady at 1.8 million.
The Employment report is a set of labor market indicators. The unemployment rate measures the number of unemployed as a percentage of the labor force.
Nonfarm payroll employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The average workweek reflects the number of hours worked in the nonfarm sector.
Average hourly earnings reveal the basic hourly rate for major industries as indicated in nonfarm payrolls.
Analysts say if ever there was an economic report that can move the markets, this is it!
The anticipation on Wall Street each month is palpable, the reactions are dramatic, and the information for investors is invaluable.
By digging just a little deeper than the headline unemployment rate, investors can take more strategic control of their portfolio and even take advantage of unique investment opportunities that often arise in the days surrounding this report.
The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state and future direction of the economy. They also provide insight on wage trends, and wage inflation is high on the list of enemies for the Federal Reserve.
Fed chairman Alan Greenspan talks about this data frequently and watches for inflation constantly.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise, bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events.
