WASHINGTON (Reuters) - Employment grew at the fastest pace in four years in April as businesses ramped up hiring, suggesting the economic recovery was growing less dependent on government support.
Employers added 290,000 jobs last month, the Labor Department said on Friday, far more than analysts had anticipated. In addition, 121,000 more jobs were created in February and March than previously estimated.
Private-sector job growth in April was much stronger than expected, with government hiring for the decennial U.S. census a secondary factor.
Officials have kept the economy on life support with record low interest rates and a $787 billion package of government spending and tax cuts, and the report eased fears the recovery could falter as the support fades.
“This is now a recovery that could survive the withdrawal of the policy support that we have in place. The missing pieces of the jigsaw are there now, labor market conditions are picking up and strengthening,” said Paul Ashworth, senior U.S. economist at Capital Economics in Toronto.
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 after its battering during the worst recession since the 1930s.
“We’ve got to be mindful that today’s jobs numbers, while welcome, leave us with a lot of work to do. It’s going to take time to achieve the strong and sustained job growth that is necessary,” Obama told reporters at the White House.
Markets had expected nonfarm payrolls to rise 200,000 last month and the jobless rate to remain unchanged at 9.7 percent.
The unexpectedly robust report was largely ignored by stock market investors who worried the debt crisis in Greece could spread to other euro zone nations with huge budget deficits.
Stocks on Wall Street ended down, a day after posting their biggest-ever intraday slide, wiping out this year’s gains. Prices for U.S. government debt fell, while the U.S. dollar rose versus the yen.
Private-sector employment increased 231,000, the largest gain since March 2006. Analysts had expected private payrolls to rise between 50,000 and 100,000. Like overall employment, private payrolls have now grown for four straight months.
Census hiring contributed 66,000 jobs in April.
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.
But with the U.S. unemployment rate expected to remain elevated until year-end and scant wage inflation, the Federal Reserve is expected to keep benchmark rates near zero for some time to come, analysts said.
“We got hit so hard on jobs that the economy needs to grow for quite a while before the Fed will conclude that any inflationary pressures are starting to build,” said Julia Coronado, a senior economist at BNP Paribas in New York.
“The rise in the unemployment rate just highlights that there are so many underemployed and unemployed workers that the labor force needs to absorb before we are anywhere close to a normal economy or employment.”
Nonetheless, investors slightly increased expectations the U.S. central bank will raise its key target rate by September.
Despite signs the recovery is gaining momentum, Americans remain dissatisfied and Obama’s popularity has taken a beating. His fellow Democrats face a tough fight in congressional elections in November, with their majority status at stake.
Republicans say Obama’s policies — including the 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.
More than 8 million jobs were lost during the recession and economists warn it will take years to regain them.
Last month, manufacturing payrolls saw their largest gain since 1998 and construction employment defied expectations of a fall. Service sector payrolls advanced for a fourth month, and temporary help hiring also rose.
Also encouraging, the length of the average workweek rose to 34.1 hours from 34 hours in March.
“This adds materially to the upward trend in labor demand and labor income and will support and sustain consumer spending,” said Bill Cheney, chief economist at John Hancock Financial Services in Boston.
The upbeat report was tempered by the rise in the number of people who had been out of work for 27 weeks or more to 6.7 million. That represented a record 45.9 percent of the total 15.3 million unemployed in April.
In addition, a broad measure of unemployment that includes workers who want a job but have stopped looking and those working part time for economic reasons rose to 17.1 percent from 16.9 percent in March.
But the improving labor market tone is encouraging Americans to take on some debt. Total U.S. consumer credit rose $1.95 billion in March after dropping $6.21 billion in February, a Federal Reserve report showed.
Additional reporting by the White House team; Editing by Andrew Hay