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Economy creates more jobs than expected in April

People looking for work stand in line to apply for a job during a job fair at the Miami Dolphins Sun Life stadium on May 2, 2013 in Miami, Florida.Joe Raedle / Getty Images

The U.S. economy's job-creation engine revved up in April, defying expectations that government budget cuts and a cold start to spring in much of the nation conspired to slow hiring.

The Labor Department reported Friday that non-farm payrolls rose by 165,000 last month, while the unemployment rate edged a bit lower to 7.5 percent.

The report also substantially boosted the number of new jobs created in the prior two months. March's payrolls were raised to 138,000, some 50,000 more jobs than previously reported, and February's job count was revised upward to 332,000, the largest since May 2010.

Economists had been expecting job creation of about 145,000 to 150,000, although that forecast had become increasingly dampened over the week as more data showed the economy cooling this quarter.

A report earlier in the week on private sector hiring showed businesses adding a lower-than-expected 119,000 jobs in April. A separate report showed the manufacturing sector, which has helped stoke the recovery's engine, expanded only modestly last month.

The employment report, which many look to as one of the economy's critical gauges, was released as scheduled Friday morning despite a fire overnight at the Labor Department that shut the building down for most employees.