Employers add 274,000 jobs

Jeannine Aversa

Friday, May 6, 2005 | 9:33 a.m.

WASHINGTON -- Employers ramped up hiring in April, adding 274,000 jobs, enough to hold the nation's jobless rate steady at 5.2 percent. The latest figures offered a hopeful sign that the labor market is gaining traction and that any economic rough patch will be temporary.

The Labor Department report, released today, also showed that job gains for both February and March turned out to be bigger than previously estimated. That also suggested that the overall health of the job market is improving.

"The economy is back on track," said Bill Cheney, chief economist at John Hancock.

The 274,000 net number of jobs added in April was the most since February and exceeded economists' forecasts. Before the report was released analysts were calling for a gain of about 175,000. They were also predicting the unemployment rate would be unchanged from March's reading of 5.2 percent.

Payroll gains were widespread, with retailers, health care providers, construction companies and financial services all showing employment rising. Manufacturing, however, lost jobs for the second straight month.

Job gains for March were revised to 146,000 from an initial estimate of just 110,000. And, payrolls for February were moved up to show an increase of 300,000, better than the 243,000 previously reported.

In another development, consumer confidence sank over the past month as surging energy bills and higher borrowing costs led people to worry about inflation and the condition of the economy generally.

The AP-Ipsos consumer confidence index came in at 78.2 in May, according to figures released today. That was down sharply from the showing of 84.5 registered in April and represented the lowest reading since October 2003.

May's showing suggests that consumers aren't feeling as good about the economy's prospects as they did a year ago, when the index clocked in at 87.4.

The Federal Reserve, worried more about inflation than economic growth, boosted short-term interest rates on Tuesday by one-quarter percentage point to 3 percent. It was the eighth increase of that size since the Fed began to tighten credit last June.

Economists said Friday's report would keep the Fed on a course of pushing rates higher through much of this year.

Workers' average hourly earnings rose in April to $16, up 0.3 percent from March's $15.95. That was slightly higher than the 0.2 percent increase that analysts were forecasting. That pickup might make the Fed a little bit more nervous about inflation but likely won't make the board more aggressive in tightening credit, said Anthony Chan, senior economist at JP Morgan Asset Management.