Spring stunner: Jobs report blows past forecasts

The labor market roared ahead in April as milder weather helped employers add 288,000 jobs — the most in more than two years.

The unemployment rate fell to 6.3% from 6.7% — the lowest since September 2008, the Labor Department said Friday. The decline, however, came because the labor force--which includes those working and looking for jobs--shrank by 806,000.

Economists surveyed by Action Economics estimated that 210,000 jobs were added last month.

Businesses added 273,000 jobs, led by strong gains in professional and business services, retail and restaurants, and construction. Federal, state and local governments added 15,000.

Job gains for February and March were revised up by a total 36,000. February's increase was revised to 222,000 from 197,000 and March's to 203,000 from 192,000.

Some analysts expected breakout employment gains after payroll processor ADP's survey this week showed businesses added 220,000 jobs in April. Other economic indicators also have picked up lately, including factory output, retail sales and consumer confidence.

Some economists also expected a healthy bounce-back effect after the government said this week that the economy grew just 0.1% in the first quarter.

Scott Brown, chief economist of Raymond James, says many small businesses have been hesitant to add employees, in part because of concerns about the new health coverage mandate. But rising demand is increasingly forcing their hand.

"You're at the point where hiring is really going to start to pick up," he says.

Some other labor market indicators in Friday's report were also strong. The number of temporary employees increased by 24,000, possibly heralding further solid gains in permanent workers.

A broader measure of job-market distress — that includes part-time employees who prefer full-time jobs and those who've given up looking for work, as well as the unemployed — fell to 12.3% from 12.7%.

And the number of Americans out of work at least six months dropped by 287,000 to 3.5 million. That group still represents 35.5% of all those unemployed.

Other developments were less encouraging. The average work week was unchanged at 34.5 hours after posting a healthy gain in March. Average hourly earnings were also unchanged at $24.31 and are up just 1.9% for the year, in line with sluggish wage growth so far in the five-year-old recovery.

"Typical workers are running as fast as they can to stay in the same spot," Brown says. Many economists say wage growth will accelerate when the jobless rate falls below 6% as demand for workers starts to outstrip the supply.

Last month, professional and business services led the broad-based job gains, adding 75,000. Education and health services added 40,000 jobs; retailers, 34,000; construction, which is benefiting from the housing recovery, 32,000; and leisure and hospitality, 28,000.

Manufacturers added 12,000. Although the federal government cut 3,000 jobs, local governments added 17,000 and states added 1,000.

Many economists expect the economy and job market to accelerate this year because of higher household wealth and reduced debt, a continuing housing recovery and more modest federal government spending cuts.