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BUSINESS
U.S. Department of Labor

Economy gains 165,000 jobs; jobless rate, 7.5%

Paul Davidson, USA TODAY
A worker hammers nails at a housing development under construction on April 16 in San Mateo, Calif.
  • Unemployment rate over 7%25 for 54 months since November 2008
  • Job gains for February%2C March revised up by 114%2C000
  • Average monthly gains for past six months now over 200%2C000

Employers added a better-than-expected 165,000 jobs in April,, easing concerns that payroll growth may be slipping into a sustained midyear slump.

The unemployment rate fell to 7.5% from 7.6%, the Labor Department said Friday. That's the lowest since December 2008. It was more than enough to fire up the stock market. The Dow Jones industrial average topped 15,000 for the first time Friday morning, minutes after the Standard & Poor's 500 index sailed past an all-time high of 1,600.

Payroll gains for February and March were revised up by a total 114,000. February's gains were revised to 332,000 from 268,000 and March's to 138,000 from 88,000. Monthly job growth has averaged 196,000 so far this year, vs. 183,000 for all of 2012.

April's report exceeded economists' median forecast of 148,000 job gains for last month.

Businesses added 176,000 jobs. Federal, state and local governments cut 11,000, likely reflecting federal deficit-cutting that recently went into effect. Professional and business services, restaurants and health care led the private-sector job gains.

Jim O'Sullivan, chief U.S. economist of High Frequency Economics says the surprisingly solid report likely indicates that the anticipated spring economic slowdown due to federal deficit-cutting could be just a modest scaleback.

"What spring swoon?" he says. "There really hasn't been much slowing."

He estimates monthly job growth could average about 165,000 the next several months before picking up to 200,000-plus by the fourth quarter.

There were some other positive signs in the report. The number of temporary workers increased by 31,000. The addition of contingent workers typically augurs stronger permanent hiring.

And the number of Americans out of work at least six months fell by 258,000 to 4.3 million.

But there were some possibly worrisome signals. The average workweek fell to 34.4 hours from 34.6 hours. Employers typically increase existing workers' hours before adding new staffers and a decline may mean less future hiring. Many small businesses with around 50 employees may be limiting the hours of workers to fall below the staffing threshold at which they need to provide health insurance under the new health reform law.

Average hourly earnings rose 4 cents to $23.87.

Also, the underemployment rate — a wider gauge of joblessness that includes people who stopped looking for work and part-time workers who prefer full-time jobs, as well as the unemployed — rose to 13.9% from 13.8%.

Several economic reports this week appeared to solidify the view that the economy and job market are mired in a fourth-straight spring slump. A survey by payroll processor ADP estimated businesses added just 119,000 jobs last month. Manufacturing activity in April barely grew, while construction spending fell.

Economists have largely blamed the weakening on across-the-board federal spending cuts, a recent payroll tax increase and small-business hesitancy to hire because of coming health care insurance requirements.

Yet the number of Americans applying for unemployment benefits for the first time fell last week by 18,000 to 324,000, Labor said Thursday. O'Sullivan said that bolstered his view that the recent downturn was largely due to a mild January and February that pulled forward economic activity and a colder-than-usual March and April.

In April, professional and business services led job gains, with 73,000. Leisure and hospitality added 43,000; retailers, 29,000, and health care, 26,000.

Construction companies cut 6,000 jobs and manufacturers added none, possibly underscoring the effects of defense cuts and the economic malaise in Europe.

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