Job Gains Speed Up, More Seek Work

The U.S. job machine finally slipped into gear last month, adding jobs at a pace last seen before the recession. Yet the unemployment rate also ticked up as the number of people seeking work surged, a sign that the economy isn't yet growing fast enough to sate the need for jobs.

The Labor Department report, released Friday, showed jobs grew in a wide swath of the economy, from manufacturing to professional services, and offered reassuring signs that the U.S. economy is recovering. "We're on more solid ground after these data than we thought we were," said Alan Levenson, an economist for T. Rowe Price Associates. "That should reduce, at least at the margins, the concerns that ones might have had of the impact on our economy of what's going on in Europe."

The government said 290,000 jobs were created in April and it revised upward by a total of 121,000 the gains for the previous two months.

The jobless rate ticked up to 9.9% from 9.7% as 805,000 workers left the sidelines and entered or rejoined the labor force. The flood of new job seekers comes amid signs that employers are hiring, as often happens in the early innings of a recovery. "People are encouraged to come back in the labor force and start looking for jobs," said Julia Coronado, a BNP Paribas analyst. "It's good that they're not so discouraged anymore."

The employment numbers came a day after the Dow industrials took a harrowing 998.5 point plunge in a five-minute selloff. The WSJ's Dennis Berman, Evan Newmark and Dave Kansas discuss.

The positive U.S. job report came amid growing worries about the potential of a new downturn in Europe as that region grapples with a government-debt crisis that shows signs of reeling out of control. Europe's woes have cast a pall over global stock markets. The Dow Jones Industrial Average closed at 10380 on Friday, down 139.889 points, or 1.3%. Most economists still predict limited spillover from Europe, given that the pace of global growth, particularly in Asia, has quickened. But this could change if Europe's downturn intensifies or spreads to U.S. credit markets.

The U.S. still has a long way to go to regain the nearly 8 million jobs wiped out since the recession hit: At the rate of job growth notched in April, it would take about 27 months just to restore those jobs, not to mention creating jobs for new entrants to the work force. In all, 15.3 million people were out of work and seeking jobs in April. Almost half of those who were unemployed, some 45.9%, had been out of work for 27 weeks or more.

Nearly all of April's job gains came from private-sector hiring, not temporary government hiring for the 2010 Census. Rising private-sector hiring is crucial since it holds the potential to pick up the slack that will be created as the effects of government economic stimulus fade later this year.

Professional and business services occupations led the job gains in April, adding 80,000 to its ranks. Accenture PLC, the consulting firm, is in the midst of hiring 50,000 employees globally-with 7,000 of those being added in the U.S.-by the end of August. The firm is hiring nearly twice as many workers as last year because of increased demand from clients, said John Campagnino, the company's senior director for recruitment.

Manufacturing, which has been recovering fastest from the recession, added 44,000 jobs. Even construction, especially hard-hit during the downturn, saw payrolls rise by 14,000. Education and health services added workers as well. The government added 66,000 workers for the Census in April; some of that was offset by declining employment in state and local governments facing strained budgets.

Baker Hughes Inc., a Houston-based oil-field-services company, was among those adding employees. Its business dropped precipitously last summer, after the number of working oil and natural gas rigs in the U.S. hit 876, down from 2,031 at its August 2008 peak. Baker Hughes thought the downturn would last for at least two years, says Paul Butero, president of U.S. land operations. So it shed 1,400 employees between mid-2008 and mid-2009, bringing its work force down to about 4,300.

But by the third quarter of 2009, business had started to return, Mr. Butero says. "We expected a U-shaped recovery, but we had an immediate bounce back," he says. Now, there are 1,483 rigs running in the U.S., according to the company. "Our customers are very bullish. Activity is increasing every week," he says.

And so is Baker Hughes's hiring. Between September and April, the company hired 539 employees, 45% of whom were previously laid off during the cutbacks.

Among leisure and hospitality industries, which also faced declines during the recession as Americans cut back on travel and dining out, employment grew by 45,000 last month.

One of those adding jobs in recent months was the Knowland Group Inc., a Salisbury, Md.-based small firm that makes business-development and sales software for hospitality businesses. The company has grown its work force to about 50 employees, from roughly 35 at the beginning of the year, said chief executive Michael McKean.

"Last year was bad-it was catastrophic," Mr. McKean said.

But now things are looking better: More clients are reporting business is improving, prompting the company to launch a new product in February that it had been putting off during the recession. "There's still pain out there, but it's turning," Mr. McKean said. "I think there are opportunities right now quite frankly."

In a separate report, consumer credit-outside of real estate loans-increased at a 1% annual rate in March after declining in February and rising in January, the Federal Reserve said.

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