US economy records bumper jobs growth in April

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The US economy created 288,000 jobs in April, the strongest monthly job creation since January 2012.

The largest jobs gain came in professional and business services, which added 75,000 jobs during the month.

The unemployment rate fell to 6.3%, according to the latest figures from the US Labor Department.

However, economists caution that figure was flattered by a sharp decline in the size of the labour force.

Nevertheless it is the lowest unemployment rate since September 2008.

Analysis

The latest jobs figures will reinforce perceptions that the US economy is regaining momentum, after growth ground almost to a halt during the first three months of the year.

The slowdown was widely blamed on the effects of an unusually harsh winter, and economists say the unexpectedly rapid rate of job creation, alongside other positive data, makes it more likely that this was just a short term blip.

That might explain why the Federal Reserve chose to ignore the GDP figures earlier this week, and said it would continue winding down its monetary stimulus programme, known as quantitative easing.

But the jobs figures aren't entirely positive. They also reveal that more than three quarters of a million Americans left the jobs market and are no longer looking for work. If people aren't actively searching for a job, they don't get included in the unemployment figures.

So the official unemployment rate may have fallen to its lowest level since 2008, but it shouldn't be seen as a reason to crack out the champagne.

"It's a flat out good report. All of the metrics that you want to see improve, did," said Tom Porcelli, chief US economist, RBC Capital Markets.

"The one thing I would be careful with though is the decline in the unemployment rate, the decline in the unemployment rate was a function of the labour force falling by 806,000, that is gargantuan decline," he added.

There was also some disappointment over weak wage growth. Average hourly earnings in the private sector did not increase in April and over the past year wages are up a modest 1.9%.

Winter recovery

The latest unemployment figures are another piece of evidence showing that the US economy is recovering from a harsh winter.

The weather was blamed for a sharp slowdown in US growth in the first quarter to an annual rate of 0.1%.

But economists say Friday's strong job report underlines that the GDP figures released on Wednesday were an anomaly.

"It shows that the negative reading on GDP is something to be ignored," said Russell Price, senior economist, Ameriprise Financial.

"Throughout this summer the economy will likely continue to gain traction, and we're likely to see GDP numbers improve significantly... for the next two quarters at least," he added.

Greensboro, North Carolina, March A harsh winter was blamed for weak first quarter growth figures

On Wednesday, the US Federal Reserve continued to cut back its effort to boost the economy.

The central bank said it would trim its monthly bond purchases by an additional $10bn (£5.9bn) to $45bn.

The bank has been buying bonds to keep long-term interest rates low and stimulate economic activity.

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