BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Unemployment Inches Up, But Payrolls Pop

This article is more than 10 years old.

The unemployment rate may have risen in April, but Friday's monthly job report was strong, offering an encouraging sign that the U.S. economic recovery possesses real momentum.

On Friday the U.S. Labor Department said nonfarm payrolls added 290,000 jobs in April, well ahead of Wall Street's 180,000 forecast. The unemployment rate on the other hand rose to 9.9%; it was expected to hold steady at 9.7%. The government also revised the amount of jobs added in March to 230,000, from 162,000.

"It's great news," says Tim Speiss, chairman of Personal Wealth Advisors at Eisner. "I'm not concerned about the rate going to 9.9%. The big story is the jump in payrolls." Speiss points out the manufacturing sector added the most workers since August 1998, while employment in the services sector saw its best gain since November 2006.

Aside from the uptick in the unemployment rate, the report was encouraging, demonstrating job growth spread throughout different sectors of the economy. Speiss emphasized that the jobless rate itself is a lagging indicator. "What the report is really about is how many new jobs were created, and that's the big news," he says.

Unemployment is arguably the most important factor in the economic recovery as jobless levels will determine everything from consumer demand to home prices to credit availability, but conditions may improve well before the progress shows up in the headline figure.

Friday's release comes a day after the Labor Department reported first-time jobless claims fell by 7,000 last week, to 440,000, in line with expectations. Significantly, the decrease was the third in a row the government reported, representing a hopeful sign the jobless market is thawing. The four-week average of claims, which smooths fluctuations, declined 4,750 to 458,500, its first decrease in five weeks.

There have been several other encouraging economic indicators. On Monday the Institute for Supply Management, a trade group of purchasing executives, said the manufacturing sector expanded in April at its fastest pace in nearly six years, while ISM data Wednesday showed the services sector also grew in April, representing the fourth consecutive month of increases. Overall, the economy expanded by 3.2% in the first quarter, the Commerce Department said last week, the third straight period of growth.