US employers hired workers at the fastest clip in more than two years last month, pointing to a rebound in economic growth after a dreadful winter and keeping the US Federal Reserve on track to end bond purchases this year.
However, the brightening outlook was tempered somewhat by a sharp increase in the number of people dropping out of the labor force, which pushed the unemployment rate to a five-and-a-half-year low of 6.3 percent. Wage growth also was stagnant.
Non-farm payrolls surged 288,000 last month, the Labor Department said on Friday. That was their largest gain since January 2012 and beat economists’ expectations for only a 210,000 rise.
“It lends significant legitimacy to the positive tone in the wide array of post-February economic reports, which have all been consistently pointing to a significant pickup in economic growth momentum this quarter,” said Millan Mulraine, deputy chief economist at TD Securities in New York.
March and February’s data was revised to show 36,000 more jobs than previously reported.
About 806,000 people dropped out of the labor force last month, unwinding the previous months’ gains. That helped to push down the unemployment rate 0.4 percentage point to its lowest level since in September 2008.
However, overall the data suggested the economy was gathering strength and led investors to pull forward their bets on when the Fed will start to raise interest rates.
The strong payrolls growth added to upbeat data, such as consumer spending and industrial production, in suggesting that sputtering growth in the first quarter was an aberration, weighed down by an unusually cold and disruptive winter.
The Fed on Wednesday shrugged off the dismal first-quarter performance. The US central bank, which announced further reductions to the amount of money it is pumping into the economy through monthly bond purchases, said indications were that “growth in economic activity has picked up recently.”
“It also matches well with the Fed’s expectations for the labor market, excluding the sharp unemployment rate drop, and likely means more US$10 billion dollar reductions in monthly asset purchases at future meetings,” said Scott Anderson, chief economist at Bank of the West in San Francisco.
Economists expect second-quarter GDP to top a 3 percent pace. Last month’s drop in the labor force could have been driven by some of the 1.35 million people who lost their longer-term unemployment benefits at the end of last year.
Since they are no longer receiving unemployment benefits, they have little incentive to continue looking for work, as required by law.
“Baby boomers are retiring and the various government benefits, including disability, are contributing to the drop in the participation rate,” said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo, California.
Still, there is little doubt the labor market is strengthening. A broad measure of unemployment, which includes people who want to work, but have stopped looking and those working only part time, but who want more work, fell to a 20-year low of 12.3 percent last month. It was at 12.7 percent in March.
Despite the strong gains, average hourly earnings were flat last month, pointing to lack of wage pressure and still ample slack in the economy.
“There is just no sign of any broad-based wage pressure,” said Josh Feinman, chief global economist at Deutsche Asset & Wealth Management in New York.
“There is still slack in the labor market and with labor costs still dead in the water, the Fed is probably not going to have to rush [to raise rates],” he added.
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li
Dutch brewing company Heineken NV on Friday announced an investment of NT$13.5 billion (US$414.62 million) over the next five years in Taiwan. The first multinational brewing company to operate in Taiwan, Heineken made the statement at a ceremony held at its brewery in Pingtung County. It also outlined its efforts to make the brewery “net zero” by 2030. Heineken has been in the Taiwanese market for 20 years, Heineken Taiwan managing director Jeff Wu (吳建甫) said. With strong support from local consumers, the Dutch brewery decided to transition from sales to manufacturing in the country, Wu said. Heineken assumed majority ownership and management rights
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI