April hiring surge largest in four years

U.S. employers added an unexpectedly large 290,000 jobs in April. That’s the strongest hiring burst in four years and a welcome signal that companies are becoming more confident that the economy will continue to strengthen.

April’s results marked the fourth straight month of employment gains, according to the U.S. Labor Department. Paradoxically, the government reported an uptick in the unemployment rate — to 9.9% from 9.7% in the first three months of this year — as out-of-work people, seeing better employment prospects, rejoined the labor market in search of jobs.

Though encouraged by the tens of thousands of new jobs, economists remained cautious about the near-term outlook. Although the total jobs created in April far exceeded their expectations, many analysts questioned whether that momentum could be sustained, especially if the financial turmoil in Europe spreads and weakens the global economy.

What’s more, even if U.S. employers could maintain April’s job growth numbers indefinitely, analysts said, it would be several years before the American economy could replace the 8.4 million jobs lost during the downturn in 2008 and 2009.

The economy needs to create about 125,000 net new jobs every month just to keep pace with population growth. Many more than that will be needed over a sustained period to drive down the jobless rate.

“It was a good report, but I think we have a long, long way to go,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

Baker said job growth may soften in the coming months as state and local governments react to budget problems and the benefits of the federal economic stimulus money fade.

The Labor Department also revised higher its tally of the nation’s payrolls in February and March. It said Friday that the economy added 230,000 jobs in March, up from 162,000 previously estimated, and that employers created 39,000 jobs in February instead of cutting 14,000 positions. All told, payroll jobs increased by 573,000 over the past four months.

Those figures are derived from a government survey of employers. With the economy in transition, officials may be underestimating new hires at start-ups and at smaller firms, just as they substantially undercounted layoffs at businesses closed during the downturn. A separate survey of households that includes the self-employed showed that 550,000 more people in the U.S. were working in April than in March.

“New business formations will continue to keep the economy afloat, if not play a major role in the turnaround,” said Michael Bernick, former director of California’s Employment Development Department who is now with a San Francisco law firm.

President Obama, after seeing millions of jobs disappear during his first year in office, was quick to claim at least partial credit for the job numbers.

Calling those figures the “truest measure of progress,” he said the “difficult and, at times, unpopular steps that we’ve taken over the past year are making a difference,” specifically citing the federal government’s $787 billion Recovery Act stimulus package.

But there are limits to what government can do, Obama added. “The true engine of our job growth in this country will always be the private sector. We still have more to do.”

In April, private employers accounted for 231,000 of the 290,000 net new jobs. Analysts were expecting only a fraction of that number, projecting that the Census Bureau would add more temporary staff than all the private-sector hiring last month.

But the agency added only 66,000 workers last month in connection with the 2010 census. The Census Bureau is expected to hire hundreds of thousands of employees before summer, which will probably give a large though temporary boost to the job numbers for May.

Last month manufacturing continued its resurgence, boosting payrolls by 44,000. Since December, factory employment has risen by 101,000 positions, the Labor Department said. The increases came after manufacturers shed more than 2 million workers during the recession amid dramatic cutbacks in production and inventories.

Economists doubt last month’s hefty factory payroll gains can be sustained once the businesses they supply build up their inventories. Some of them, particularly exporters, may take a hit from the depressed euro and weaker growth prospects in Europe.

But in the short term many manufacturers see the outlook as positive.

“We’re right on the cusp of starting to bring on new people,” said John Winzeler, president of Winzeler Gear in Harwood Heights, just outside Chicago. After having “been in the valley of death for 18 months,” he said his 35-employee, third-generation family company saw a 30% increase in sales in the first quarter from a year earlier.

“We’re profitable today and putting a little bit away,” he added. Winzeler makes precision plastic gears for the automotive and other industries. About 15% of his sales are from exports. Of the troubles in Europe, he said, “It’s all unsettling. But I can’t worry about it. I can’t control it.”

The nation’s construction sector also appears to be coming out of its hiring doldrums , adding 14,000 jobs in April after an increase of 26,000 in March. Industry groups said the federal stimulus, which earmarked billions for highway and bridge projects, has been contributing to the gains. Even the long-depressed new-home construction market is showing some signs of improvement, although housing prices have yet to turn around.

Most of the nation’s service payrolls rose last month as well. Professional and business services, added 80,000 jobs. In that category, temporary-help firms, often seen as a precursor to broader hiring, boosted staffing by 26,000 workers. The leisure and hospitality industry also added 45,000 workers last month.

The only major industry showing a sizable job loss in April was transportation and warehousing, which cut 20,000 jobs.

“We’re not hitting on all cylinders but on enough where the momentum is building,” said Ken Matheny, a senior economist at Macroeconomic Advisers, a research and forecasting firm based in St. Louis.

The increased hiring means more people who were sidelined by the recession will be entering the labor force, and that will tend to push the jobless rate higher. The unemployment figure is calculated by dividing the unemployed by the total labor force, which is made up of those who are working and not working.

But the Labor Department counts people as unemployed only if they are actively looking for work. So it’s common in the early stages of a recovery for the official number of the unemployed and the jobless rate to keep rising even as the economy is adding jobs.

In April, officials said, 195,000 unemployed people reentered the job market. In a slightly different category is Jay Thornton, 47, who had taken a long time off without looking for work after retiring from the military.

Thornton, of Newbern, Tenn., said that last month he started job-hunting again, partly because he saw the employment market getting better. “It’s definitely more optimistic,” he said. “It’s still challenging right now, [but in] springtime things seem to bloom.”

He will be competing with many workers, some of whom have been pounding the streets for many months.

Friday’s report said that the ranks of the officially unemployed rose by 255,000 in April to 15.3 million. And those who have been without work for more than six months reached 6.7 million, accounting for a whopping 46% of all the unemployed workers.

Early this year, Sean O’Donnell, 48, closed up his window-cleaning business in West Palm Beach, Fla. Many of his customers, he said, “died off or moved back in with their kids.”

Since then, he hasn’t had much luck in the job market, even at fast-food restaurants. “They say no because I’m ‘overqualified.’ ” But O’Donnell said work was picking up for his wife, who is in real estate. And he sees signs that the overall economy is turning around.

“I actually think things are getting better,” he said.

Staff writer Christi Parson contributed to this report.