Solid April jobs report shows economy gaining momentum

April’s job gains were widespread. Retailers, factories, financial companies, education and health care and even construction companies all added new workers. Federal, state and local governments cut jobs.

The data suggest businesses are confident in the economy despite weak growth earlier this year. Payrolls growth increased sharply in February and March, marking the fastest two-month pace of job creation since before the recession began and heralding a decisive shift in the labor market.

“The trend now is definitely up,” former Federal Reserve governor Larry Meyer told CNBC Friday. “The economy is regaining momentum and we are on the path for above-trend growth. This [number] is much stronger than expected.”

However, the jobs report showed the nation’s unemployment rate rose to 9 percent in April from a two-year low of 8.8 percent seen in the prior month. The increase was the first since November, but was due in part to the fact that more Americans have resumed looking for work.

Reacting to Friday’s jobs numbers, Austan Goolsbee, the chairman of the White House Council of Economic Advisers, told CNBC he expected the nation’s unemployment rate to fall if job creation continues at its current pace.

A string of downbeat economic data this week — including a sharp slowdown in the vast services sector, a decrease in hiring by private companies in April and an eight-month high for jobless aid applications — had some worried that April’s jobs report could be weaker than expected.

With gas prices spiking, consumers are spending more to fill the tanks, leaving them with less to spend elsewhere. As a result, consumer spending has weakened and many companies are feeling less certain about the economy's health.

"High gas prices are a big headwind for the economy. It's sucking money out of people's wallets," said Bill Cheney, chief economist at John Hancock Financial Services.

Most analysts agree that the economy has strengthened enough to keep growing this year. And many say the factors that held back growth at the start of the year were most likely temporary. They predict growth will pick up over the rest of the year.

There have been some positive signs. Retailers reported strong April sales, helped by a late Easter. Auto companies reported brisk sales. And factories have expanded production this year at the fastest pace in a quarter-century.

Economists' prediction for a pickup in overall growth is based, however, on gasoline prices stabilizing in the months ahead and then dropping to around $3.50 a gallon or lower near the end of the year.

The national average was $3.99 a gallon on Thursday, according to the AAA.

If gas prices keep rising, consumers are likely to spend less on other goods and services. That could prompt companies to hire fewer workers.
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