Hiring points to resilience in economy
By Jason Lange
WASHINGTON (Reuters) - Employers stepped up hiring a bit in May in a show of economic resilience that suggests the Federal Reserve could begin to scale back its monetary stimulus later this year.
The United States added 175,000 jobs last month after adding only 149,000 in April, the Labor Department said on Friday.
The pickup in hiring came despite tax hikes and sweeping budget cuts enacted earlier in the year. The unemployment rate ticked a tenth of a point higher to 7.6 percent, but only because more Americans began to hunt for jobs.
"The labor market continues to trudge forward," said Jim Baird, an investment officer for Plante Moran Financial Advisors in Kalamazoo, Michigan.
Even so, the jobless rate remains well above pre-recession levels and May marked the third straight month that U.S. payrolls increased by less than 200,000.
The report showed an economy still in need of the Fed's pedal-to-the-metal support, but which could be strong enough by September for the U.S. central bank to ease up on its bond-buying stimulus, many economists said.
"It's constructive enough to support the notion that bond buying should be curtailed as we go into the late third (or) early fourth quarter," said Ian Lyngen, a bond strategist at CRT Capital Group in Stamford, Connecticut.
Officials at the U.S. central bank have intimated they could be close to reducing the $85 billion in monthly bond purchases despite modest economic growth. The recovery is not expected to pick up steam until late in the year when the sting from government spending cuts begins to fade. Continued...