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Economy added 290,000 jobs in April

U.S. nonfarm payrolls grew at the fastest pace in four years in April as private sector employers ramped up hiring, raising the strong possibility that the labor market recovery may be picking up steam.
/ Source: Reuters

U.S. employment grew at the fastest pace in four years in April as private sector businesses ramped up hiring, showing the labor market recovery gaining steam.

President Barack Obama called the news "very encouraging."

Employers added 290,000 jobs in April, the Labor Department said Friday, far more than analysts had expected. The department also revised figures for February and March to show 121,000 more jobs were added than previously estimated.

"I think we are moving into this very reassuring range of strong employment growth. It is consistent with the way the economy is going," said Kurt Karl, chief U.S. economist at Swiss Re in New York.

The unemployment rate, however, rose to 9.9 percent as discouraged workers started to look for work again.

Stubbornly high unemployment has been a political sore spot for President Barack Obama and his fellow Democrats, even though the job market is showing increased vigor.

Analysts polled by Reuters had expected nonfarm payrolls to rise 200,000 last month and the jobless rate to remain unchanged at 9.7 percent. The median forecast from the 20 most accurate forecasters was for a 188,000 increase in payrolls.

The stronger-than-expected reading for the most widely watched U.S. economic indicator did little to encourage investors worried about the euro zone's debt crisis.

U.S. stocks, which Thursday suffered their biggest-ever intraday slide, traded near 1 percent lower Friday and prices of Treasury bonds, which would normally fall on signs of economic growth, were flat.

Private sector employment increased 231,000, the largest gain since March 2006, after rising 174,000 in March. Private payrolls have grown for four months.

Analysts had expected private employment to rise between 50,000 and 100,000 in April.

Census hiring contributed 66,000 jobs.

Data ranging from manufacturing to consumer spending have pointed to a pick-up in the recovery from the U.S. economy's longest and deepest downturn since the Great Depression.

The jump in U.S. jobs growth was mirrored in Canada, where a record number of workers found jobs in April, stunning markets and adding pressure on the Bank of Canada to raise interest rates in June, ahead of other major industrialized countries.

The U.S. data was unlikely to put pressure on the Federal Reserve, with economists noting earnings for private sector workers were flat in April and would not put pressure on inflation.

Nonetheless, investors slightly increased expectations the Fed will raise its key target rate. Implied prospects that the Fed will raise the target by its Sept. 21 meeting edged up to 50 percent from about 46 percent before the jobs figures.

"The trend is improving," said Zach Pandl, an economist at Nomura Securities International in New York. "The economic recovery is gaining momentum."

Christina Romer, head of the White House Council of Economic Advisers, said the jump in payrolls last month was the strongest sign yet that the labor market was healing but noted the high unemployment rate was still a cause for concern.

Public disenchantment over the economy, especially the labor market, is damaging Obama's popularity. His fellow Democrats face a tough fight in congressional elections in November, with their majority status at stake.

Republicans say Obama's policies -- including a record economic stimulus package -- have failed to deliver on their promise of reducing the jobless rate, which is expected to still be painfully high when elections roll around.

About 8.2 million jobs were lost during the recession and economists warn it is likely to take years to regain that lost employment.

U.S. consumers have begun to participate in what has been a manufacturing-led recovery, but job growth is crucial to sustaining that trend.

Last month, manufacturing payrolls increased 44,000 after rising 19,000 in March. Construction employment gained 14,000, rising for a second month and defying expectations of a fall.

Payrolls in the service sector increased 166,000, advancing for a third month. Temporary help hiring increased 26,200, strengthening the jobs recovery theme.

Temporary employment is seen as a precursor to full-time jobs. Government payrolls rose 59,000, adding to the prior month's 56,000 increase.

The average workweek rose to 34.1 hours from 34 hours in March.