US hiring points to resilience in economy
175,000 jobs created in May keeps alive speculation Fed will scale down easing
US employers stepped up hiring in May in a show of economic resilience that suggests the Federal Reserve could begin to scale back the amount of cash it is pumping into the banking system later this year.
The United States added 175,000 jobs last month, labour department data showed yesterday.
The unemployment rate ticked a tenth of a percentage point higher to 7.6 per cent, in a relatively hopeful sign as it was driven by more workers entering the labour force.
Still, after a winter in which the economy seemed to be turning a corner, May was the third consecutive month that payrolls outside the farm sector increased by less than 200,000.
Speculation has grown that the Fed could begin reducing its support for the economy by trimming bond purchases as soon as this fall, and yesterday's jobs data did little to change expectations.
"It's not great, but it's good. It leaves the tapering talk still on the table," said Steve Blitz, chief economist at ITG in New York.
Investors seemed to take the data as a sign the economy was weathering an increase in government austerity this year. The US stock market rose in early trading after the data. The Dow Jones Industrial Average rose 0.4 per cent points to 15,106 points after the market opened while the Standard & Poor's 500 index rose 0.5 per cent to 1,629 points. The US dollar strengthened against the euro and the yen.
Fed officials have said they could be close to reducing bond purchases despite modest economic growth, which is not expected to pick up until late in the year.
About 4.4 million Americans have been unemployed for more than six months, roughly 3 million more than pre-recession levels.