US jobs report points to a healthy drop in underemployment

In this Nov. 20, 2015, photo, a UPS employee works inside the company's Worldport hub in Louisville, Ky. On Friday, May 5, 2017, the U.S. government issues the April jobs report. (AP Photo/Patrick Semansky)

WASHINGTON (AP) — A burst of hiring in April provided a reassuring sign for the U.S. economy and reduced a broader gauge of the job market’s health to its lowest level since the recession began nearly a decade ago.

Employers added 211,000 jobs, more than double the weak showing in March, the Labor Department said Friday . The unemployment rate dipped to 4.4 percent, a 10-year low, from 4.5 percent in March.

Taken as a whole, the April jobs report suggested that American businesses are confident enough in their outlook for customer demand to keep adding jobs briskly despite a slump in the January-March quarter when the economy barely grew.

The jobs report “does increase our confidence that the soft patch in the first quarter is over,” Michael Gapen, an economist at Barclays Capital, said in an email to clients.

In an encouraging sign, the number of part-time workers who’d prefer full-time jobs has reached a nine-year low. That trend suggests that many employers are meeting rising customer demand by shifting part-timers to full-time work. During much of the economic recovery, the number of part-timers remained unusually high — one reason why steady job growth didn’t produce sharp gains in pay or consumer spending.

The shift toward full-time work has also helped reduce a measure of underemployment that includes people who aren’t counted as unemployed: They are the part-time workers who want full-time jobs as well as people who have given up their job hunts.

This broader figure reached 8.6 percent in April, the lowest point since November 2007, just before the recession officially began. In 2009, it had topped 17 percent.

That broader measure of underemployment has been cited by President Donald Trump and his advisers as a more accurate gauge of the job market’s health than the unemployment rate.

So far, the job market under Trump closely resembles the one Barack Obama presided over. This year, employers have added an average of 185,000 jobs a month, matching last year’s pace.

In his first 3½ months, Trump has sought to put his imprint on the economy. A deputy White House spokeswoman, Sarah Huckabee Sanders, said falsely at a briefing for reporters Friday that job growth in April occurred “especially” in industries where the president has focused: Coal mining, construction and manufacturing. In fact, those three sectors accounted for less than 6 percent of April’s job growth.

A representative of the White House, contacted later by The Associated Press, said that Sanders had misspoken.

Some of the job market’s scars from the Great Recession have yet to heal. The proportion of Americans who either have jobs or are looking for one dipped in April to 62.9 percent from 63 percent. While that figure has improved over the past 18 months, it remains well below the prerecession level of 66 percent.

Economists don’t expect that figure to get much better. With the vast baby boom generation retiring and younger Americans more likely to stay in high school and attend college, fewer Americans will likely work or seek work in the foreseeable future.

Friday’s jobs report makes it highly likely that the Federal Reserve will resume raising short-term interest rates when it next meets in mid-June. Investors have estimated the likelihood of a June rate hike at 83 percent.

Beyond hiring, the economy is showing other signs of health: Sales of existing homes have reached the highest point in a decade. And a survey of services firms this week — including restaurants, banks and retailers — showed that they are expanding steadily.

Average paychecks did grow more slowly in April, increasing 2.5 percent over the past 12 months, below March’s year-over-year gain. Companies may not yet feel much pressure to raise pay to find or keep the workers they need. Typically, employers feel compelled to pay more as the number of unemployed dwindles. In a strong economy, hourly pay gains tend to average around 3.5 percent.

One reason for the tepid wage gain is that hiring was strongest last month in lower-paying industries. One such category that includes hotels, restaurants, casinos and amusement parks added 55,000 jobs, the most of any major sector.

Health care, which includes some higher-paying jobs in nursing as well as lower-paid home health care aides, added 37,000 in April.

Many manufacturers are looking to add jobs but say they can’t find enough qualified workers. Eric Kus, CEO of Goshen Stamping in Goshen, Indiana, wants to add six to eight employees to his 80-person staff. The company makes parts for the stepladder and RV industries.

“It’s getting better,” Kus said of the economy. Rising home sales and growing interest in do-it-yourself work among homeowners have boosted his company’s revenue about 6 percent so far this year, he said.

Friday’s jobs report adds to evidence that economic growth is rebounding in the current April-June quarter, with some economists forecasting that it could top a 3 percent annual rate, compared with the first quarter’s 0.7 percent rate. Last quarter, consumers spent less in part because of low utility bills during an unseasonably warm winter. That’s likely to prove a temporary restraint.

The retail industry’s woes continued last month, with stores adding just 6,000 jobs. That’s below their long-run average and comes after retailers slashed a combined 55,000 jobs in February and March. Traditional chains like Sears and Macy’s have been shedding jobs in the face of ferocious competition from Amazon.com and other e-commerce companies.

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AP Economics Writer Josh Boak contributed to this report.

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Follow Chris Rugaber on Twitter at http://Twitter.com/ChrisRugaber

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