The Labor Department reported on Friday that the nation’s unemployment rate inched up to 9.9 percent in April, but the economy added 290,000 jobs, the fastest pace in four years.
The slight uptick in the April unemployment rate took some of the bloom off an otherwise encouraging jobs report, which saw payrolls increase throughout the private sector economy, and well ahead of expectations.
The unemployment rate is an important factor in the economic recovery, as jobless levels determine everything from consumer demand to home prices to credit availability.
More People Started Looking for Work
The reason that overall unemployment rose was because more people started looking for work, boosting the size of the labor force. The total number of people unemployed in April was 15.3 million.
"There is less to the two-tick rise in the unemployment rate than meets the eye," said Alan Levenson, chief economist at T. Rowe Price, noting that the increase actually reflected strength in the labor market.
The Labor Department said that nonfarm payrolls added 290,000 jobs in April, well ahead of most economists’ forecasts of 180,000 new jobs. The government also revised upward the number of jobs added in March to 230,000, from 162,000.
"This Is Great News"
"This is great news," said Tim Speiss, chairman of Personal Wealth Advisors at Eisner. "I'm not concerned about the rate going to 9.9 percent. The big story is the jump in payrolls." Speiss pointed out that the manufacturing sector added the most workers since August 1998, while employment in the services sector saw its best gain since November 2006.
The economy has added an average of 143,000 jobs a month since the beginning of the year, which should fuel optimism about the job market's recovery.
The economy has lost nearly 8.5 million jobs over the past two years. Although the downturn probably ended 10 months ago, companies have been reluctant to boost hiring until they see evidence of a stronger economy. The Federal Reserve expects the unemployment rate to remain above 9.0 percent until the end of 2010 as the economy continues to recover only slowly.
How Will Manufacturing Rebound?
For years, manufacturing jobs have disappeared as the service sector has grown. “One of the things we will be looking for is to see how manufacturing rebounds," said Keith Hall, commissioner of the Bureau of Labor Statistics. "Hopefully, some of this loss is cyclical and we will get some of those jobs back."
More recently, the recession has hit middle-skill jobs -- from sales and production work to office and administrative. Post-graduate degrees are proving increasingly valuable and temporary positions have seen gains in recent months.
Aside from the uptick in the unemployment rate, the report was encouraging, demonstrating job growth spread throughout different sectors of the economy. Speiss emphasized that the jobless rate itself is a lagging indicator. "What the report is really about is how many new jobs were created, and that's the big news," he says.
The manufacturing sector added 44,000 jobs, and professional and business services contributed 80,000, while health care, and leisure and hospitality also saw increases. Employment from the Federal government also rose, though much came from continued hiring of Census 2010 workers. Jobs in transportation and warehousing dropped by 20,000 though, due to a large decline in courier and messenger services.
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