By Timothy R. Homan – May 6, 2011 7:17 AM PT

American employers in April added more jobs than forecast, indicating the world’s largest economy is weathering the impact of higher fuel prices.

Payrolls expanded by 244,000 last month, the biggest gain since May 2010, after a revised 221,000 increase the prior month, the Labor Department said today in Washington. The jobless rate climbed to 9 percent, the first increase since November, a separate survey of households showed. Employment was forecast to grow by 185,000 last month, according to the median estimate of economists surveyed by Bloomberg News.

Stocks jumped after four days of losses, commodities rallied and bonds slid as the report eased concern that the economic recovery is cooling. The figures bolster Federal Reserve Chairman Ben S. Bernanke’s forecast for a labor market that is “improving gradually.”

“This is good news, and it’s getting better,” James Glassman, senior economist at JP Morgan Chase & Co. in New York, said in a radio interview on “Bloomberg Surveillance” with Tom Keene. “People increasingly are becoming more confident that we are on a recovery track.”

The Standard & Poor’s 500 Index advanced 1.1 percent to 1,349.13 at 10:15 a.m. in New York. The Thomson Reuters/Jefferies CRB Index of commodities added 0.4 percent, erasing an earlier decline as oil reversed a 5.2 percent slide. The yield on the benchmark 10-year note increased to 3.2 percent from 3.15 percent as Treasuries halted a six-day rally.

The economy has generated 760,000 private jobs in the past three months, the report showed. Overall, companies added 2.1 million jobs since last February, after the loss of 8.8 million as a result of the 18-month recession.

“So much for the headwinds of higher gasoline prices the economy is facing,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.

Range of Estimates

Payroll estimates in the Bloomberg survey of 86 economists ranged from gains of 118,000 to 325,000. March was revised up from a previously reported gain of 216,000, and February payrolls increased 235,000 after a prior estimate of 194,000.

The unemployment rate was projected to hold at 8.8 percent, according to the survey median.

Private hiring, which excludes government agencies, rose by 268,000 in April, more than the 200,000 median forecast in the Bloomberg survey and the most since February 2006, after a 231,000 increase in March.

Among companies adding workers is Norfolk Southern Corp. (NSC) The fourth-biggest U.S. railroad is expanding payrolls as it benefits from an economic expansion that’s boosting shipping volumes. First-quarter profit excluding some items was $1 a share, topping the 90-cent average estimate from 27 analysts surveyed by Bloomberg.

‘Need to Hire’

“We still have a need for additional employees for the business that we’ve got out there,” Mark Manion, chief operating officer of Norfolk Southern, said in an April 27 teleconference. “There is a need to hire for our current business as well as hiring for the growth that’s anticipated in the first — this year and on into 2012.”

The separate survey of households showed the size of the labor force was little changed in April and employment shrank by 190,000. That pushed the share of the population in the labor force down to 58.4 percent from 58.5 percent a month earlier.

Government payrolls decreased by 24,000 last month. Local government employment dropped by 14,000.

Factory payrolls increased by 29,000 last month, more than the survey forecast of a 20,000 gain, after a 22,000 rise in March.

Service Providers

Employment at service-providers rose 200,000 in April after a 184,000 gain the prior month. The health care industry added 37,300 workers in April. Construction payrolls rose 5,000 and retail trade employment increased 57,100. The gain at retailers may have reflected the effects of an Easter holiday that occurred later this year than last, making seasonal adjustment difficult for Labor Department.

While payrolls have grown each month since October, Bernanke said on April 27 that central bankers would like to see more strength in the U.S. job market, noting that a recovery has been “quite slow.”

“The labor market is improving gradually,” Bernanke said to reporters during the first-ever press conference following a Federal Open Market Committee meeting. “We would like to make sure that that is sustainable. The longer it goes on, the more confident we are.”

Economic growth slowed to a 1.8 percent annual rate in the first quarter after expanding at a 3.1 percent pace in the last three months of 2010, according to Commerce Department figures.

Gasoline Prices

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