New government data released Friday morning showed the nation added 288,000 jobs in April, a reassuring sign that the economy has picked up momentum since stalling out over the winter.
The hiring spree surpassed most analysts' expectations and is the strongest showing in more than two years. Businesses added workers across a broad array of sectors, including business services, retail and construction. The unemployment rate plunged to 6.3 percent -- the lowest level since 2008 -- though part of that was due to workers leaving the labor force.
The upbeat report provided a convincing counterpoint to data released earlier this week that revealed economic growth was virtually flat during the first quarter. Many analysts attributed that weak reading to the unusually cold winter and argued that a spring thaw is already underway. The Labor Department also increased its estimates of hiring during the previous two months by 36,000 net jobs.
"This was an exceptionally strong report, and it suggests that the labor market has more than recuperated from the weather-induced slumber earlier this year," said Millan Mulraine, deputy head of U.S. research and strategy at TD Securities.
The construction industry provided one of the biggest boosts to job creation last month. The sector added 32,000 jobs, concentrated in heavy and civil engineering and residential building. Over the past year, it has hired 189,000 workers, with the bulk of those gains coming within the last six months.
The main hiring engine was the professional and business services sector, which created 75,000 net jobs. Retailers and bars and restaurants each added more than 30,000 jobs. The health care industry gained 19,000 positions.
April’s pickup in hiring also helps validate the Federal Reserve’s decision this week to continue scaling back its support for the recovery. The nation’s central bank is reducing its monthly bond purchases by $10 billion to $45 billion -- about half the amount it was pumping into the economy every month last year. The Fed has tied its stimulus to the health of the labor market, and Friday’s data clearly show it is improving.
There was at least one ominous note in the report, however. The nation's workforce shrank by more than 800,000 workers in April, sending the labor force participation rate plummeting 0.4 percentage points to 62.8 percent. The Labor Department said there has been no clear trend of workers entering or leaving the labor force in recent months.
"I would actually say that this big drop in the unemployment rate is not consistent with a really robust labor market because that labor force participation rate did not rise, and the employment-to-population ratio is shockingly low,” said Tara Sinclar, an economics professor at George Washington University and economist at Indeed.com, one of the nation's largest sites for job postings.
Some measures of the labor market remained stubbornly weak. The number of long-term unemployed fell slightly to 3.5 million in April, accounting for roughly one-third of America’s jobless. About 7.5 million people were in part-time jobs for economic reasons. Fed Chair Janet Yellen has cited those dynamics as reasons to keep the central bank’s benchmark short-term interest rate low for years to come.
But the sharp drop in unemployment could complicate the Fed's task. Several top officials, including San Francisco President John Williams and Atlanta Fed President Dennis Lockhart, have said they believe the first rate increase should come when the jobless rate falls to about 6 percent. Both officials had predicted that would not happen until next year, but that goal post is now much closer.
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