WASHINGTON - Somebody apparently forgot to tell the nation's employers about that so-called "soft patch" in the economy. Rather than hunker down, they went on a hiring spree last month.
The Bureau of Labor Statistics said yesterday that employers added 274,000 workers to their payrolls in April. This topped the 160,000 jobs that economists had expected and signaled that their forecasts, influenced by oil prices, might have been a tad too pessimistic.
"The feared soft patch looks now like just a puddle by the side of the road," said Bill Cheney, chief economist at John Hancock Financial Services in Boston. "The U.S. jobs machine has finally shifted into a higher gear and will likely drive strong economic growth through the rest of the year."
David Wyss, chief economist at the Standard & Poor's financial services firm in New York, called the report "a bit of a surprise" that contained several pieces of good news, including upward revisions in hiring in February and March, an increase in the number of hours worked and a boost in average earnings.
"Generally speaking, it's looking pretty good out there," Wyss added, mentioning stronger car and chain-store sales and an increase in factory orders, reported over the past week.
Average hourly earnings of production or nonsupervisory workers in private nonfarm payrolls rose 5 cents, to $16. Average weekly earnings increased 0.9 percent, to $542.40.
Most analysts said these earnings increases were good news, though economist Heather Boushey of the Center for Economic and Policy Research, a Washington think tank, said wage growth over the past four months has not kept pace with inflation.
The national unemployment rate held steady at 5.2 percent, according to the report, chiefly because of a surge of new people entering the work force - many of whom were apparently too discouraged to seek work in the past.
The share of the population with a job increased to 62.6 percent from 62.4 percent.
Yet the report could have one unwelcome consequence. Economists said that since the job figures indicate a stronger economy, it could cause the Federal Reserve to be a bit more aggressive in raising interest rates to keep inflation contained.
"The fear of inflation now takes center-stage attention," said Bernard Baumohl, director of the Economic Outlook Group, a Princeton, N.J., forecasting company.
If the economy continues to add jobs at the April pace, he said, the Fed likely will raise interest rates higher than now expected over the course of the year. He said its benchmark rate could go as high as 4.25 percent by year's end, rather than the 3.5 percent he had forecast earlier.
Despite the good news overall, the nation's manufacturing sector lost 6,000 jobs last month. David Heuther, chief economist for the National Association of Manufacturers, said high productivity in the factory sector and stiff competition from abroad were the main reasons.
Employment gains in the service sectors were widespread. Jobs increased by 58,000 in the leisure and hospitality industries, 25,000 in health care, 18,000 in technical services and 17,000 in financial services.
In addition, the job figures for February and March were revised upward by 93,000.
Pierre Ellis, economist at Decision Economics in New York, a consulting firm, said the weakness in the economy that gave rise to the phrase "soft patch" might have been exaggerated.
"The new figures, combined with revisions for previous months, mute the appearance of a softening of the economy," he said.
The Bureau of Labor Statistics does two job surveys. The one most frequently mentioned is its survey of business establishments, which many analysts consider a more reliable measure of employment. That survey showed the increase of 274,000 jobs.
The second, a survey of about 60,000 households, is designed to estimate the job picture across the economy. Although considered less reliable than the business establishment survey, economists say it picks up employment in the small-business and entrepreneurial side of the economy.
The household survey in April showed that 598,000 jobs were created but that the labor force jumped by 605,000. Unemployment, as a result, grew by 7,000 people. Still, analysts considered that surge in employment a highly positive development.
The Chicago Tribune is a Tribune Publishing newspaper.
