Economy creates 290,000 jobs. No, wait! Unemployment rises.

Optimists see recovery with 290,000 jobs created in April. Pessimists point to rise in the unemployment rate. Who's right?

Lucas Jackson/Reuters
A "Now Hiring" sign is seen on the back of a Fresh Direct grocery delivery truck in New York City May 6. The US economy created 290,000 jobs in April, a solid sign of recovery despite an increase in the unemployment rate.

Think you know the direction of the US economy? OK, pick the right headline for this story:

1) Recovery creates 573,000 jobs in four months

2) Unemployment rises to 9.9 percent, near October peak

Both are true for the month of April. But in this case, the real story lies with the optimists. The US economy looks like its swung into serious job-recovery mode after 23 months of decline and nearly 8.4 million jobs lost.

Why the disconnect between the jobs gains and the unemployment rate? The figures are calculated from different federal surveys. More importantly in this case, the US Labor Department doesn't count everyone who's unemployed as unemployed, only those who are actively looking for work.

Not surprisingly, as the employment picture brightens, more people start looking for work.

"The job market is coming back and people are coming off the sidelines and getting into the game," says Scot Melland, CEO of Dice Holdings, which runs specialized career websites in the technology, financial services, and healthcare industries.

The disconnect between job creation and the unemployment rate even brought out President Obama to explain the paradox.

"This may seem contradictory," he said in a Friday press conference. But "workers who have dropped out of the workforce entirely are now seeking jobs again."

The Labor Department reported Friday that 290,000 jobs were created last month, nearly twice the total that many analysts were expecting. The Labor Department also revised upward the gains for March from 162,000 to 230,000.

Although April's hiring was inflated by the federal government's hiring of 66,000 temporary census workers, the gains in the private sector were much larger than expected and reflected growth in everything from manufacturing to professional and business services.

Another strong sign: A growing number of those jobs appear to be full-time positions, says Mr. Melland. Slightly more than 58 percent of the technology and engineering jobs advertized on his website were full time during the past two months. In May, it jumped to 62.5 percent -- a health increase.

"We've reached that point now where [employers] are confident enough in their business prospects and they're needing workers," he says.

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