US employment rose at a faster pace than expected last month and hiring was much stronger than previously thought in the prior two months, a sign of resilience that should help the economy absorb the blow from belt-tightening in Washington.
Non-farm payrolls rose by 165,000 jobs last month and the unemployment rate fell to 7.5 percent, the lowest level since December 2008, the US Department of Labor said on Friday.
The job counts for February and March were revised up by a net 114,000.
“This bolsters the case that the US economy will be able to survive the combined headwinds of sequestration and a deepening recession in Europe,” San Francisco-based Bank of the West chief economist Scott Anderson said.
Investors on Wall Street cheered the data, which beat economists’ expectations for a 145,000 jobs gain and a steady 7.6 percent reading on the unemployment rate.
US stocks rallied, with the Standard & Poor’s 500 index and the Dow Jones industrial average closing at record highs. The US dollar vaulted to a one-week high against the yen, while US Treasury debt prices tumbled.
Payrolls rose by 138,000 jobs in March, 50,000 more than previously reported, and job growth for February was revised up by 64,000 to 332,000, the largest increase since May 2010.
However, the gains last month were far below the 206,000 jobs per month average of the first quarter, the latest evidence the economy is cooling, even if not as quickly as earlier feared.
Indeed, the data provided a number of signs of a loss of momentum.
Construction employment fell and manufacturing payrolls were flat. The length of the average workweek pulled off a nine-month high and a gauge of the overall work effort fell.
Economists pin the slowdown largely on higher taxes that took hold at the start of the year and US$85 billion in federal government spending cuts, known as the sequester, that went into effect at the beginning of March. Economies overseas have also weakened, cutting into US export growth.
While the US economy grew at a 2.5 percent annual pace in the first quarter, data on construction spending, retail sales and trade suggested it ended the period with less momentum.
Further, factory data for last month imply the economy braked further at the start of the second quarter, a thesis supported by a report on Friday that showed the pace of growth in the services sector last month was the slowest in nine months.