US created 288,000 jobs in April vs 210,000 est

Job creation accelerated in April as the U.S. economy added 288,000 new positions, while the unemployment rate plummeted to 6.3 percent amid a sharp drop in the workforce.

Economists had been anticipating 210,000 new jobs and a 6.6 percent rate.

Despite the big number, not all the news was good: The headline rate tumbled as 806,000 people left the civilian labor force. The labor force participation rate slumped to 62.8 percent, its worst of the year and near 35-year lows. Also, the average work week was unchanged at 34.5 hours, as were average hourly earnings at $24.31.

Consequently, markets moved higher following the report’s release, but only modestly. Stock market futures indicated a slight gain at the open, though government bond yields popped.

The report comes amid economic growth of 0.1 percent in the first quarter that consensus expects to reverse higher for the rest of 2014. Friday’s number added to those hopes.

Jeff Kowalsky | Bloomberg | Getty Images Employees work on the axle of a 2015 Chrysler 200 at the company's Sterling Heights Assembly Plant in Sterling Heights, Michigan, March 14, 2014.

Jeff Kowalsky | Bloomberg | Getty Images
Employees work on the axle of a 2015 Chrysler 200 at the company’s Sterling Heights Assembly Plant in Sterling Heights, Michigan, March 14, 2014.

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“Weather, sequestration, a significant buildup of inventory and other factors have helped bottle up some (economic) strength,” Bart van Ark, chief economist at The Conference Board, said in a statement. “Now, it would appear, the absence of these factors is finally allowing the economy’s underlying strength to come to the surface. The result is not just a relatively strong gain in jobs in April but probably more of the same in May and June and perhaps right through the summer.”

Employment surged across sectors, with professional and business sectors adding 75,000 and retail gaining 35,000. Food and drinking establishments rose 33,000 while construction added 32,000 positions, according to the report from the Bureau of Labor Statistics.

“Over the prior 10-year period, the second quarter has always been the most robust for job growth; so it was critical we have a pop in April,” said Todd Schoenberger, managing partner at LandColt Capital. “This figure bodes well for the rest of the quarter. Challenges may appear in the second half of the year due to slower GDP rates, but today’s report is reason to celebrate.”

Many market watchers had been anticipating a hot jobs number on belief that inclement winter weather had suppressed economic activity and cooled the jobs market, though the numbers didn’t completely back that argument.

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Revisions reported Friday further doused the weather story, as job creation was actually quite strong in the early months of 2014. Revisions pushed February’s number to 222,000 and March’s initially reported 192,000 to 203,000.

At the same time, the Federal Reserve has been forced to adjust its focus on the headline unemployment rate as a guide for policy.

The U.S. central bank had kept a 6.5 percent target as the trigger for a rate increase, but declining labor force participation and weak inflation ratings have forced the Fed to change its approach from targeting specific numbers to a more nebulous focus on the quality of economic conditions.

Friday’s nonfarm payrolls report was unlikely to move the needle on Fed policy, which is focused on reducing the monthly bond purchases and keeping its target funds rate near zero.

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