Companies hiring: Jobs surge in private sector

April's surprisingly strong jobs report shows companies hiring at the fastest pace in five years. Can the momentum continue?

Tony Dejak/AP
Kniena Scott (center) talks with a prospective employer Tuesday, May 3, 2011, in Independence, Ohio. Employers added more than 200,000 jobs in April for the third straight month, the biggest hiring spree in five years. But the unemployment rate rose to 9 percent in part because some people resumed looking for work.

The private sector is gaining momentum in this recovery – and that is very good news for American workers.

Despite higher energy prices and more layoffs by state and local governments, the economy created more jobs in April than in any month in nearly a year.

The driver of that growth? US businesses, which created 268,000 jobs last month, the biggest one-month increase in more than five years.

With an overall growth of 244,000 jobs and upward revisions in its February and March estimates, the Department of Labor figures released Friday show that more Americans are now working than at any time since March 2009. The big question is whether that hiring momentum can continue if the economy hits a softer patch.

"Overall, this is a very healthy job number," says Scot Melland, CEO of Dice Holdings, which runs specialized career websites in the technology, financial services, and healthcare industries. "This is now 14 months in a row of private-sector job growth."

The jobs report coincides with the firm's own figures, which show a 20 percent jump in job postings for tech professionals from a year ago and, in some cities where technology companies are concentrated, a growing shortage of workers in specific disciplines.

The job numbers surprised many analysts because other reports, including a big rise in initial unemployment insurance claims and a surprisingly weak service-sector survey, suggest that economic growth is moderating. The Labor Department also reported Friday, using a different survey, that the unemployment rate rose from 8.8 percent in March to 9.0 percent in April. (The unemployment rate and payroll numbers often diverge with economists, on balance, paying closer attention to the payroll numbers.)

"We don't think that payroll employment growth will keep up the same pace in May and June, since we can't dismiss the weaker evidence from initial [unemployement] claims," writes Nigel Gault, an economist with IHS Global Insight, in a written analysis. "But the three-month-average employment increase of 233,000 through April shows good momentum that should allow the economy to absorb the twin shocks from the Middle East and Japan without too much damage."

Those headwinds didn't appear to make much of a dent in April employment. The leisure and hospitality sectors – areas where consumers would most likely cut back on in the face of higher gasoline prices – saw jobs increase 46,000 last month. Employment in the auto sector, most directly hit by Japan's supply-chain problems, still rose by nearly 3,000.

The jobs report did contain some worrying signals. The temporary workforce, a source of strength in the early part of the recovery, declined slightly in April. This could mean that employers are finally hiring temporary workers on as full-time employees or it could be a sign of slowing. Also, April's small rise in worker compensation didn't keep pace with inflation.

"The bigger problem is the rebound in the unemployment rate to 9.0 percent, from 8.8 percent," writes Paul Ashworth, an economist with Capital Economics, in an analysis. "The rebound in the unemployment rate underlines how far we still have to go."

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