WASHINGTON — The U.S. economy showed last month why it remains the envy of industrialized nations: In the face of tax increases and federal spending cuts, employers added a solid 165,000 jobs in April — and far more in February and March than anyone thought.
The job growth in April drove down the unemployment rate to a four-year low of 7.5 percent and sent a reassuring sign that the U.S. job market is improving. Coming after a poor jobs report for March, the figures the government issued Friday helped ease fears that U.S. hiring might be slumping this spring for a fourth straight year.
The Labor Department revised up its estimate of job gains in February and March by a combined 114,000. It now says employers added 332,000 jobs in February and 138,000 in March. The economy has created an average of 208,000 jobs a month from November through April — above the 138,000 added in the previous six months.
"This is a good report," said John Silvia, chief economist at Wells Fargo. "There's a lot of strength... It's good for the economy. It's good for people's income."
The stronger job growth suggests that the federal budget cutting "does not mean recession," Silvia said. "It does not mean a dramatic slowdown."
Stock prices soared in response. The Dow was up about 150 points in midafternoon trading and briefly touched 15,000 for the first time.
The unemployment rate has fallen 0.4 percentage point since the start of the year, though it remains high. The Federal Reserve has said it plans to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent.
The hiring last month was concentrated in services. Construction companies and governments cut jobs. Home builders added staff, while commercial construction companies cut. Manufacturing employment was flat.
Some higher-paying sectors added workers. Professional and technical services, which includes accounting, engineering and architecture, added 23,000 jobs. Education and health services added 44,000.
One cautionary note in the April employment report: Most of the biggest job gains were in lower-paying fields, such as hotels and restaurants, which added 45,000 jobs, and retail, which added 29,000. Temporary-help firms gained 31,000 positions.
Average hourly pay rose, but the average workweek for private-sector employees dipped 0.2 hour to 34.4 hours. That meant average weekly paychecks declined.
But over the past year, total pay after adjusting for inflation is up a healthy 2.1 percent, economists said. That increase should fuel consumer spending in coming months.
The job growth is occurring while the U.S. economy is growing modestly but steadily. It expanded at a 2.5 percent annual rate in the January-March quarter, fueled by the strongest consumer spending in two years.
A strong recovery in housing is helping drive more hiring. Rising home sales and construction creates more jobs and spurs more spending on furniture, landscaping and other services.
One company that's benefited is SolarCity, based in San Mateo, Calif. Rising home building has helped increase demand for the solar-power systems the company installs in homes and businesses.
CEO Lyndon Rive says SolarCity added 177 jobs in April and will welcome its 3,000th employee Monday. It's hiring engineers, installers and administrative support staff and still has 400 open jobs.
Consumers have been spending more even though their take-home pay was shrunk this year by a Social Security tax increase. On top of that, the economy has been under pressure from across-the-board government spending cuts that began taking effect March 1. And some small and midsize companies are concerned about new requirements under the federal health care law.
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