WASHINGTON — The U.S. economy added 175,000 jobs in May— a steady pace that shows strength in the face of tax increases and government spending cuts if not enough to reduce still-high unemployment.
The unemployment rate rose to 7.6 percent from 7.5 percent in April, the Labor Department said Friday. The rate rose because more people began looking for work, a healthy sign, but only about three-quarters found jobs.
Analysts said the less-than-robust job growth probably would lead the Federal Reserve to maintain the pace of its monthly bond purchases for a few more months. The bond purchases have been intended to ease long-term borrowing costs and lift stock prices.
Investors appeared pleased by the evidence that job growth remains steady. The Dow Jones industrial average gained nearly 208 points.
Nevada’s May jobs numbers won’t be out until June 21, but the Silver State’s labor markets have shown their own steady improvements. Statewide unemployment fell to 9.6 percent in April, down from 11.5 percent a year earlier. In Las Vegas, joblessness also came in at 9.6 percent, compared with
11.3 percent in April 2012.
Leisure and hospitality has led the way in the state’s recovery, creating about a third of new jobs. Other big gainers this spring have included retail and construction, though the building sector is still roughly 100,000 jobs short of its pre-recession high of 150,000. What is more, Nevada has only restored 24 percent of the jobs it lost in the downturn.
Friday’s national job figures provided further evidence of the U.S. economy’s resilience, and that should translate into more discretionary spending in travel, tourism and hospitality industries. 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 U.S. economy’s relative strength contrasts with Europe, which is gripped by recession, and Asia, where once-explosive economies are struggling.
Many analysts expect the U.S. economy to strengthen later this year.
“Today’s report has to be encouraging for growth in the second half of the year,” said Dan Greenhaus, an analyst at BTIG LLC.
Employers have added an average of 155,000 jobs the past three months. But the May gain almost exactly matched the average increase of the previous 12 months: 172,000.
Americans appear to be 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.
That is called the labor force participation rate. Higher participation can boost the unemployment rate. That is 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 is partly the result of baby boomers retiring and dropping out of the workforce.
Some signs in the report suggested that the government spending cuts, which began taking effect in March, and weak growth in much of the rest of the world are weighing on the U.S. job market. Weakness overseas has slowed demand for U.S. exports.
Manufacturers cut 8,000 jobs, and the federal government shed 14,000. Both were the third-straight month of cuts for those industries.
The number of temporary jobs rose about 26,000, the second-straight month of strong gains. That suggests that employers are responding to more demand but aren’t confident enough to hire permanent workers.
Industries that rely directly on consumer spending hired at a healthy pace — a sign of confidence that consumers will keep spending. Retailers added 28,000 jobs. Restaurants and hotels added 33,000.
These categories include many lower-paying occupations. By contrast, the recession sharply cut jobs in higher-paying industries such as manufacturing, construction and finance, which have yet to recover.
Mark Vitner, an economist at Wells Fargo, calculated that about 60 percent of the jobs created in May were in lower-paying fields.
Review-Journal writer Jennifer Robison contributed to this report.