Payrolls Surge, Unemployment Dips to 5.6 Percent

WASHINGTON – Employers added 288,000 jobs to their payrolls in April as the nation's unemployment rate slipped to 5.6 percent, reinforcing hopes for a sustained turnaround in the jobs market that had lagged for so long.

Payrolls have risen now for eight straight months, with 867,000 new jobs created so far this year, the Labor Department (search) reported Friday. The strengthening jobs market comes just in time to aid President Bush's re-election efforts, which were in question a few months ago based on his economic record.

"I'm officially declaring the jobless recovery dead," said Ken Mayland, president of ClearView Economics. "I think we are now on a path of what will be substantial job gains."

The Bush administration was widely criticized for an overly optimistic forecast that 2.6 million new jobs would be created this year. Economists now say the chugging economy could get close to that mark.

"I don't think these two months of big increases are a flash in pan," Mayland said of April's job growth and the revised 337,000 new jobs in March.

In the report, hiring was widespread last month, with the service sector leading the way. Professional and business services employment rose substantially, by 123,000. In that category, gains were in employment services, including temporary help firms, services to buildings and dwellings, management and technical consulting services and architectural and engineering services.

The nation's struggling factories also appear to be turning around. Based on Labor Department revisions, the manufacturing sector added jobs for three straight months, including 21,000 in April. For the year, manufacturing payrolls are up by 27,000 overall.

The U.S. unemployment rate (search) fell 0.1 percentage point to 5.6 percent last month, after reaching a high of 6.3 percent in June 2003 during the economic slowdown.

Revisions to payrolls also showed a stronger jobs market than previously reported. Last month's 308,000 payroll gains were revised up to 337,000. April's showing surprised analysts, who had expected payrolls of about 180,000 to 200,000.

The economy has rebounded strongly, but companies, under intense pressure to compete globally, have been holding down their costs by working employees harder instead of hiring new ones. That appears to be changing, though critics note that job gains are occurring in the lower-paying service sector at retailers and restaurants, and in temporary employment firms.

The Federal Reserve (search) decided Tuesday to hold a key interest rate at a 46-year low of 1 percent, saying said such low rates along with productivity gains are helping to support economic activity.

But the strengthening jobs market leads economists to anticipate the first rate increases in more than four years will start this summer, probably in August, and will come in the form of one-quarter of a percentage point rises in the federal funds rate.

Other gains in April occurred in retail at building and garden supply stores, general merchandise stores and motor vehicle and parts dealers. The leisure and hospitality sector also added jobs, especially in the category of food services. Hiring also continued to be strong in health care and social assistance for the month.