Businesses added a solid 268,000 jobs in April, the Labor Department reported, encouraging hopes the economic recovery was on track even as strapped federal and local governments cut spending and payrolls.

Overall the economy created a net 244,000 nonfarm jobs last month, the department said, topping predictions of 185,000, with the biggest growth in the service sector.

It was the economy's strongest show of jobs creation since May 2009, a month before the worst recession in decades ended but left recovery in the labor market lagging behind.

And the department sharply revised higher job creation figures for February and March, putting net gains above the key 200,000 threshold for three consecutive months.

Some experts say a pace of at least 200,000 net new jobs a month is needed for a sustained period to reduce unemployment.

President Barack Obama welcomed the jobs data, coming in the face of "serious headwinds" from high gasoline prices and the impact of Japan's earthquake-tsunami disaster on US manufacturing inputs.

"There will undoubtedly be more challenges ahead. The fact is, we are still making progress. That proves how resilient the American economy is, how resilient the American worker is," Obama said in a visit to an auto transmission factory in Indianapolis, Indiana.

Obama's top economic adviser, Austan Goolsbee, noted the employment gains were a drop in the bucket for millions of Americans still trying to find a job.

"While the solid pace of employment growth in recent months is encouraging, faster growth is needed to replace the jobs lost in the downturn," he said.

Since the beginning of the jobs market recovery in early 2010, the country has added only 1.7 million jobs compared with the 8.7 million lost during the recession; the number of unemployed stayed little-changed at 13.7 million in April.

The new data showed an unexpected rise in the country's unemployment rate to 9.0 percent from 8.8 percent in March, after falling for four consecutive months.

The jobless rate and job creation data can point in different directions because they are calculated from two separate surveys: of households for unemployment, and of businesses and government agencies for payrolls.

"The rise in the unemployment rate was solely related to the decline in household employment and not from a surge of previously discouraged workers re-entering the labor force," said Michael Gapen of Barclays Capital.

"Moderate recoveries are often choppy and it is rare to have all indicators pointing in one direction at the same time," he added.

The key private-sector job creation figure of 268,000 was sharply better than the 200,000 forecast by most analysts.

"This report further confirms that the recovery is on a firmer footing and that the economy is transitioning into the expansion phase, which is accompanied by more robust job creation," said John Ryding at RDQ Economics.

Employment gains were broad-based in the vast services sector that accounts for roughly 70 percent of output.

The department said 224,000 net service jobs were created, with growth spread fairly evenly between the retail trade, professional and business services, and health care and social services.

Manufacturing, another leader in the recovery, added 7,000 jobs, while employment in the construction sector, battered in the housing crisis, was flat.

The public sector shed 24,000 jobs as governments grappled with squeezed budgets from falling tax revenues.

Americans faced rising inflation -- the rate rose an annual 2.7 percent in March -- with only a 0.1 percent rise in salaries and less purchasing power than a year ago.

earlier related report
Hopes for a quick decline in US joblessness dim
Washington (AFP) May 5, 2011 - US economists were anticipating more bad news in the jobs market when the government releases new figures for April on Friday, after a week of data suggested economic growth slowing more than anticipated.

With the unemployment rate still a grinding 8.8 percent, an expected poor number for positions created across the country last month could put new pressure on the government to find more ways to help the jobless.

On Thursday a surprising jump in the weekly indicator on new unemployment claims sent worries through the economy, helping to push the Dow Jones Industrial Average down 1.1 percent.

New claims for unemployment insurance benefits leaped to a whopping 474,000 in the week ending April 30, a 10 percent increase from the prior week, the Labor Department reported.

The rise surprised most analysts who had forecast a decline to 400,000, and sent a shudder through the US equity and oil markets as investors fretted about a slowdown in the world's largest economy.

Indeed, the number has increased in three of the past four weeks, ending a steady fall in the number of new claims since August, when the economic recovery was picking up pace.

But slower GDP growth -- only 1.8 percent in the first quarter -- has translated into a disappointment for those unemployed Americans hoping for relief.

The jobless claims report is "a disaster" and foreshadows gloomy unemployment data on Friday, Jon Ogg at 24/7WallSt.com warned.

"This is markedly heading the wrong way."

"With claims now topping expectations (and the 400,000 threshold) for four straight weeks, concerns are growing that the job market is suddenly deteriorating," said Nomura Global Economics.

Analysts on average expect the Labor Department will report 185,000 nonfarm jobs were created in April, a drop of 14 percent from March, and that unemployment will be unchanged at 8.8 percent.

Nomura's forecast was for only 150,000 new jobs.

Analysts at Deutsche Bank were more upbeat, seeing anomalies that skewed the most recent reports; they forecast that 200,000 jobs will have been added in April.

Indeed, a Labor Department official said special factors not taken into account by seasonal adjustment could explain the sharp rise in Thursday's claims numbers, including the impact of a late spring break and industry layoffs due to Japan's quake-tsunami disaster.

Briefing.com analysts agreed.

"For the past four weeks, extraneous circumstances have caused the initial claims level to rise steadily," they said.

The spike "is not the result ... of a weaker labor market" but of poor seasonal adjustment factors.

Still, underpinning the cloudy views was the weaker-than-expected report Wednesday by payrolls firm ADP, which said the US private sector added a modest 179,000 jobs in April, well below expectations.

With federal, state and local governments cutting payrolls to try and balance budgets, the private sector is expected to pick up the slack in hiring to get the economy back on track.

But sharply slowing growth especially in the all-important services sector means that the private business job-creation engine remains in low gear.

Last week Federal Reserve chairman Ben Bernanke said unemployment continues to be a major problem and is a key reason the Fed has kept up its easy-money policy.

He voiced special concern over long-term unemployment, which he said was the worst since just after World War II.

"Currently something like 45 percent of all the unemployed have been unemployed for six months or longer," he said.

"And we know the consequences of that can be very distressing because people who are out of work for a long time, their skills tend to atrophy -- they lose contacts with the labor market, with other people working, the networks that they have built up."

The Fed forecast a slow decline in the jobless rate to between 8.4 percent and 8.7 percent by the end of the year.

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