The unemployment rate surprisingly dropped to 7.5 percent as employers added 165,000 new jobs in April. Marking a four-year low, the figures have seen a small but steady rise in the last several months, increasing confidence in the growing economy,
Payrolls expanded by 165,000 following a revised 138,000 increase in March that was larger than first estimated, Labor Department figures showed today in Washington. Revisions added a total of 114,000 jobs to the counts for February and March.
Stocks rallied, sending the Dow Jones Industrial Average above 15,000 for the first time, as the report bolstered expectations that the almost four-year economic expansion will overcome a second-quarter slowdown. Hiring advanced even as employers witnessed the onset of planned government spending reductions that the Federal Reserve said are hindering growth.
“The U.S. labor market is not looking as bad as was feared,” said Aneta Markowska, chief U.S. economist at Societe Generale in New York, who correctly projected the jobless rate. “Businesses obviously cut very sharply during the recession and now that revenues are growing, they have to add to headcounts. If we do see some improvement in demand in the second half of the year, which I expect to happen, that will lead quickly to additional job creation.”
The Dow advanced 167 points, or 1.1 percent, to 14,988.84 at 1:02 p.m. in New York. The Standard & Poor's 500 Index rose 1.3 percent to 1,617.58. The yield on the benchmark 10-year Treasury note jumped 11 basis points, or 0.11 percentage point, to 1.73 percent.
“This is a good report,” said Wells Fargo chief economist John Silvia. “There's a lot of strength... It's good for the economy. It's good for people's income.”
Although the unemployment percentage is still pretty high, Silvia noted that the newly released stats throw a wrench in the argument that federal budget cuts will lead to a recession.