More US jobs added than expected in April, unemployment at a four-year low

By Megan Woolhouse, Globe Staff

The US economy last month added jobs at a faster than expected rate and the unemployment rate fell to its lowest level in more than four years, sending stock markets soaring in early trading Friday.

The Department of Labor on Friday reported private employers increased payrolls by 165,000 jobs in April. The agency also significantly revised upward its initial job growth estimates for February and March.

The increase in hiring last month was enough to lower the nation’s unemployment rate from 7.6 to 7.5 percent, the lowest its been since December 2008. That means more people found work and many who had stopped looking for jobs resumed their searches.

“It’s a good report with a lot of good news,” said Nariman Behravesh, chief economist at IHS Global Insight, a forecasting firm in Lexington. “There’s more strength in the economy than previously thought.”

The Dow Jones Industrial Average briefly crossed the 15,000 mark for the first time following the report, before retreating slightly. The Standard & Poor’s 500-stock index, meanwhile, broke the 1,600 level when trading opened.

The most surprising news in the labor department report were the tweaks of past months’ estimates. Private employers actually added 138,000 jobs in March, up from the government’s initial estimate of 88,000. Behravesh called that a “whopping” increase. The February estimate of 268,000 jumped to 332,000, marking the the biggest monthly job gain since November 2005.

The labor department revises its job estimates regularly as new information becomes available.

Robert Murphy, an economist at Boston College, said the numbers were better than expected, but that job creation needs to become even faster as the year progresses. After strong starts in 2010 and 2011, Murphy noted, the economy slowed. He believes the full effects of mandatory federal budget cuts have yet to be felt, something that could dampen economic growth. Murphy also said the ongoing European recession will likely slow US sales and exports to Europe.

Murphy hopes some federal policy makers won’t use the April jobs report to argue that the Federal Reserve should reduce its stimulus efforts that have helped keep interest rates at historic lows.

“It would be wrong now for federal policy makers to say, ‘Hey let’s take our foot off the accelerator,’” he said. “We are four years since the end of the recession and we still haven’t experienced the kind of growth you usually see coming out.”