WASHINGTON – The U.S. unemployment rate fell to its lowest level in more than four years in April, according to data released Friday, sending stock markets to new heights and dispelling fears that the recovery has stumbled.
Businesses hired more people than analysts expected, pushing the jobless rate down from 7.6 percent in March to 7.5 percent last month. The rate was the lowest since December 2008.
The Labor Department reported that the economy added 165,000 jobs in April across a broad swath of industries. Just as important, the government significantly increased its estimates of job growth in the previous two months. The average monthly gain this year is now just shy of 200,000 jobs — the minimum pace considered necessary to ensure that the recovery can lift off.
Investors wasted no time in celebrating. Both the Dow Jones industrial average and the broader Standard & Poor’s 500-stock index rose into new territory Friday. The Dow topped 15,000 points before dropping back, and closed up 142 points, or 1 percent, at a record high of 14,973. The S&P ended the day above 1,600 points for the first time, surging 16 points, or 1 percent, to 1,614.
The market surges reflected relief over the solid results in the government’s monthly jobs report. A weak reading in March gave rise to concerns that the economy was headed for a third consecutive “spring swoon,” in which momentum built up over the winter dissipated. But the new data show the recovery has been chugging along the whole time.
The U.S. economy’s strength is coming from the private sector. Professional and business services led the way in April, adding 73,000 jobs. Many of the other gains, however, were in lower-paying industries. Restaurants and bars accounted for 38,000 positions, while retailers gained 29,000.
Still, growth in those sectors suggests that American households remain willing to open their wallets despite higher taxes that took effect at the start of the year. That could prove a key driver of growth, since consumer spending accounts for roughly two-thirds of economic output.
There were weak spots in Friday’s data. Hiring in manufacturing flat-lined, while the construction industry shed 6,000 jobs. Both of those sectors, hit hard during the recession, had been ramping up in recent months amid rebounds in the auto and housing markets.
In addition, April marked the seventh straight month that the public sector has shrunk. The federal government shed about 8,000 jobs last month, according to Friday’s data, while state and local governments shaved another 3,000.
In a statement, the Obama administration said it is pushing for spending on infrastructure to boost job growth. The White House also noted that the economy consistently has added jobs for more than three years.
The April jobs report also contained a kernel of hope for the long-term unemployed, whom the government defines as workers without a job for at least 27 weeks. Their ranks fell by 258,000, to 4.4 million. At the same time, there was a decline in the number of workers so discouraged by the labor market that they have given up looking for a job. That suggests the pace of hiring may be starting to benefit those at the back of the line.
The jobs report could also have significant implications for the Federal Reserve’s $85 billion-a-month stimulus program. The central bank has been buying Treasury bonds and mortgage-backed securities to push down long-term interest rates, boosting stock prices and home values. The program is tied to the outlook for the labor market, and some officials have begun suggesting that job growth could accelerate enough for the Fed to begin winding down the purchases this year.