Unemployment jumps to 9 percent despite greater job growth

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The nation’s unemployment rate ticked up to 9 percent last month despite strong growth of 244,000 in new jobs, the Labor Department reported Friday morning.

Nearly every sector except government added jobs during the month, with particularly large gains in manufacturing, retail trade and health care. New jobs in the private sector totaled 268,000 — the heftiest monthly gain in five years. Businesses have created 2.1 million jobs in a little over a year, and the pace of hiring is quickening, U.S. officials said.

In another sign that the job market overall is strengthening, the number of temporary jobs created during the month actually fell by 2,300 — a first since the recovery began in mid-2009. Employers apparently opted to add permanent staff rather than make tentative hiring decisions as they have for several years.

Despite these signs of improvement, the unemployment rate ticked up to 9 percent from 8.8 percent in March, with increases seen in most segments of the workforce from teenagers to adult men. The rise was partly due to an increase in the labor force as more people sensed opportunities to find work.

The increase in joblessness also appeared to be partly the result of temporary layoffs, such as from auto factories experiencing shortages of parts because of the earthquake in Japan. Long-term joblessness among those out of work for more than six months — which has been a particularly big problem since the Great Recession — actually declined by 283,000.

The strong growth in private jobs seen in the Labor Department report likely will surprise financial markets, where investors were bracing for a setback in employment. A report from the department on Thursday showing a surge in new claims for unemployment benefits last week had suggested the economy was worsening and sent markets worldwide into a tizzy.

The Dow Jones Industrial Average surged by 150 points in the first few minutes of trading after release of the jobs report.

The economy is sending out “conflicting signals” which are confusing for investors and workers alike, said Nigel Gault, economist at IHS Global Insight.

“The economy slowed in the first quarter at the same time job growth accelerated,” he said. Many temporary disturbances have been at play, influencing the numbers reported by the government, including severe weather and the Japan earthquake.

“We believe the economy has more momentum” than suggested by the 1.8 percent growth rate recorded during the first quarter, Mr. Gault said.

Businesses have reached the limits of how much work they can squeeze from their existing workers and are being forced to hire new workers to handle the growth in new business they’re experiencing, he said.

“This is good for employment growth” and is likely to continue for the rest of the year, he said.

Harm Bandholz, economist at Unicredit Markets, said he also expects employment growth to continue as businesses can no longer rely heavily on the leaner staffing levels they maintained during the recession.

But he added that the strong job growth seen in April may have been exaggerated by the department’s failure to adequately adjust the figures to account for a late Easter holiday. He noted that the large job gain of 59,000 in retail trade likely was the result of later-than-usual temporary hiring for the holiday and may be reversed in future reports.

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