Employment picked up more than forecast in April and the jobless rate unexpectedly declined to a four-year low of 7.5 percent, showing the early stages of government budget cuts failed to destabilize the U.S. labor market.
Payrolls expanded by 165,000 workers last month following a revised 138,000 increase in March that was larger than first estimated, Labor Department figures showed in a Friday report. The median forecast of 90 economists surveyed by Bloomberg projected a 140,000 gain. Revisions to the prior two months’ reports added a total of 114,000 jobs to the employment count in February and March.
Hiring advanced last month even as employers witnessed the onset of planned government spending reductions, which the Federal Reserve said are hindering the economy. The expansion is projected to cool this quarter before picking up again as the cuts continue, consumer spending eases and companies pull back.
“Businesses have spent the last year very prepared for bad news,” Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York, said before the report. “In the last three to six months, they’ve been breathing sighs of relief. Fiscal issues matter, but they’re not the dominant thing happening in the U.S. economy. The dominant thing is the gradual grinding, healing in the economy, and the traction the Fed is gaining.”
The jobless rate dropped to the lowest level since December 2008 from 7.6 percent in March.
Payroll projections ranged from gains of 100,000 to 238,000 following an initially reported 88,000 increase in March, according to the Bloomberg survey.
Private payrolls, which don’t include jobs at government agencies, increased by 176,000 in April after a revised gain of 154,000 the previous month. Economists forecast they would rise 150,000 following an initially reported 95,000 gain in March.
Employment at factories stagnated in April after the addition of 2,000 in March, the report showed.
Temporary-help services added 30,800 workers to payrolls in April, the most since February 2012.
Other industries adding jobs included leisure and hospitality, retail trade and education and health services.
The report also showed average hourly earnings rose 1.9 percent from a year earlier to $23.87.
The workweek shrank to 34.4 hours for all U.S. employees on average from 34.6 hours in March. Part of the reason may be reflected in an increase in part-time employment.
The number of employees not working a full week rose to 27.5 million from 27.4 million. Some 278,000 more employees were working part time for economic reasons.
Officials at the Fed are still looking for greater progress in reducing unemployment. The central bankers said earlier this week that they plan to maintain their $85 billion monthly pace of bond purchases to spur growth and employment prospects and are prepared to raise or lower the level of purchases as the economic outlook evolves.
Economic growth will cool to a 1.5 percent annualized pace in the second quarter after growing at a 2.5 percent pace in the prior three months, according to a Bloomberg survey of economists.