WRAPUP 6-U.S. employment surges in bright sign for recovery

* Nonfarm payrolls grow at fastest pace in four years

* Private sector hiring up 231,000, four-year high

* Jobless rate rises to 9.9 pct as labor force swells

* Average workweek edges up to 34.1 hours
(Adds consumer credit, updates markets)

By Lucia Mutikani

WASHINGTON, May 7 (BestGrowthStock) – U.S. employment grew at the
fastest pace in four years in April as businesses ramped up
hiring, suggesting the economic recovery was growing less
dependent on government support.

Employers added 290,000 jobs last month, the Labor
Department said on Friday, far more than analysts had
anticipated. In addition, 121,000 more jobs were created in
February and March than previously estimated.

Private-sector job growth in April was much stronger than
expected, with government hiring for the decennial U.S. census
a secondary factor.

Officials have kept the economy on life support with record
low interest rates and a $787 billion package of government
spending and tax cuts, and the report eased fears the recovery
could falter as the support fades.

“This is now a recovery that could survive the withdrawal
of the policy support that we have in place. The missing pieces
of the jigsaw are there now, labor market conditions are
picking up and strengthening,” said Paul Ashworth, senior U.S.
economist at Capital Economics in Toronto.

The unemployment rate, however, rose to 9.9 percent as
discouraged workers started to look for work again.

Stubbornly high unemployment has been a political sore spot
for President Barack Obama and his fellow Democrats, even
though the job market is showing increased vigor after its
battering during the worst recession since the 1930s.

“We’ve got to be mindful that today’s jobs numbers, while
welcome, leave us with a lot of work to do. It’s going to take
time to achieve the strong and sustained job growth that is
necessary,” Obama told reporters at the White House.

MARKETS IGNORE DATA

Markets had expected nonfarm payrolls to rise 200,000 last
month and the jobless rate to remain unchanged at 9.7 percent.

The unexpectedly robust report was largely ignored by stock
market investors who worried the debt crisis in Greece could
spread to other euro zone nations with huge budget deficits.

Stocks on Wall Street ended down, a day after posting their
biggest-ever intraday slide, wiping out this year’s gains.
Prices for U.S. government debt fell, while the U.S. dollar
rose versus the yen.

Private-sector employment increased 231,000, the largest
gain since March 2006. Analysts had expected private payrolls
to rise between 50,000 and 100,000. Like overall employment,
private payrolls have now grown for four straight months.

Census hiring contributed 66,000 jobs in April.

The jump in U.S. jobs growth was mirrored in Canada, where
a record number of workers found jobs in April, stunning
markets and adding pressure on the Bank of Canada to raise
interest rates in June. [ID:nN0793308]

But with the U.S. unemployment rate expected to remain
elevated until year-end and scant wage inflation, the Federal
Reserve is expected to keep benchmark rates near zero for some
time to come, analysts said.

“We got hit so hard on jobs that the economy needs to grow
for quite a while before the Fed will conclude that any
inflationary pressures are starting to build,” said Julia
Coronado, a senior economist at BNP Paribas in New York.

“The rise in the unemployment rate just highlights that
there are so many underemployed and unemployed workers that the
labor force needs to absorb before we are anywhere close to a
normal economy or employment.”

Nonetheless, investors slightly increased expectations the
U.S. central bank will raise its key target rate by September.

HIGH UNEMPLOYMENT RATE

Despite signs the recovery is gaining momentum, Americans
remain dissatisfied and Obama’s popularity has taken a beating.
His fellow Democrats face a tough fight in congressional
elections in November, with their majority status at stake.

Republicans say Obama’s policies — including the record
economic stimulus package — have failed to deliver on their
promise of reducing the jobless rate, which is expected to
still be painfully high when elections roll around.

More than 8 million jobs were lost during the recession and
economists warn it will take years to regain them.

Last month, manufacturing payrolls saw their largest gain
since 1998 and construction employment defied expectations of a
fall. Service sector payrolls advanced for a fourth month, and
temporary help hiring also rose.

Also encouraging, the length of the average workweek rose
to 34.1 hours from 34 hours in March.

“This adds materially to the upward trend in labor demand
and labor income and will support and sustain consumer
spending,” said Bill Cheney, chief economist at John Hancock
Financial Services in Boston.

The upbeat report was tempered by the rise in the number of
people who had been out of work for 27 weeks or more to 6.7
million. That represented a record 45.9 percent of the total
15.3 million unemployed in April.

In addition, a broad measure of unemployment that includes
workers who want a job but have stopped looking and those
working part time for economic reasons rose to 17.1 percent
from 16.9 percent in March.

But the improving labor market tone is encouraging
Americans to take on some debt. Total U.S. consumer credit rose
$1.95 billion in March after dropping $6.21 billion in
February, a Federal Reserve report showed.
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U.S. employment graphics:

http://link.reuters.com/kyh23k

http://link.reuters.com/nuj23k
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Stock Analysis

(Additional reporting by the White House team; Editing by
Andrew Hay)

WRAPUP 6-U.S. employment surges in bright sign for recovery