Paper cutouts of shirts and tiesThe lower unemployment reading was due in part to a factoreconomists don't always see as a healthy sign: The share ofworking-age people in the labor force decreased to 62.8 percentfrom 63 percent. (Photo: Shutterstock)

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The U.S. economy accelerated its rebound from a recent softpatch as unemployment unexpectedly fell to a fresh 49-year low amidsurprisingly strong hiring and cooler-than-projected wage gains, suggesting the hot labor market canextend its run.

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Payrolls climbed by 263,000 in April after a downwardly revised189,000 advance the prior month, according to a Labor Departmentreport Friday that exceeded all estimates in a Bloomberg survey.The jobless rate unexpectedly fell to 3.6 percent while averagehourly earnings growth was unchanged at 3.2 percent, belowprojections.

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Related: High salaries, no student debt driving appeal ofblue-collar jobs

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U.S. stock futures extended gains after the report. The fedfunds futures market briefly showed a slight reduction in odds fora Federal Reserve rate cut this year, before returning to where itwas prior to the data, following calls from President Donald Trumpand others for a reduction to support the expansion. Policy makersreiterated their patient stance this week as Chairman Jerome Powellcited “very strong job creation'' while noting weakerinflation.

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“It's clearly telling you this economy is still chugging alongvery nicely,” Torsten Slok, chief economist at Deutsche BankSecurities, said on Bloomberg Television. “It is inflationary inthe sense that wages did go up but they didn't go up as much as wehad expected.”

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“Goldilocks is the best description of this,” Slok said.

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The surprising overall robustness — which didn't reflect anysurge in temporary hires for the 2020 Census, as some analysts hadflagged — follows months of broad labor market strength. While theexpansion is poised to become the nation's longest on record atmidyear, economists expect a deceleration this year even after astrong first quarter.

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However, the lower unemployment reading was due in part to afactor economists don't always see as a healthy sign: Theparticipation rate, or share of working-age people in the laborforce, decreased to 62.8 percent from 63 percent.

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Revisions for February and March added 16,000 more jobs thanpreviously reported, while the three-month average fell to169,000.

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Friday's data follow a Federal Open Market Committee statementWednesday saying “the labor market remains strong.” Officials inMarch forecast a 3.7 percent unemployment rate at year end.

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The payroll gains were somewhat uneven, with construction,health care, and professional and business services posting gainswhile retail employment fell by 12,000 for a third- straightdecline.

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Construction payrolls climbed by 33,000, the most since January,as manufacturing employment rose by 4,000. Factory employment wasunchanged in the prior month after a previously reported drop.

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Average hourly earnings rose 0.2 percent from the prior monthafter a revised 0.2 percent rise in the prior period. Wages forproduction and nonsupervisory workers accelerated to a 3.4 percentannual pace, signaling gains for lower-paid employees.

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While the historically tight labor market has pushed companiesto raise pay, inflation appears largely subdued, as the fatterpaychecks don't show any sign of fueling faster price gains.

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At the same time, the average workweek got slightly shorter,boosting average hourly pay. The average for all private employeesdecreased to 34.4 hours, from 34.5 hours.

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While temporary federal government hiring for the CensusBureau's 2020 count may be poised to give nonfarm payrolls a boost,that wasn't cited in the Labor Department's report Friday. Federalemployment excluding postal jobs rose by 12,500, still the mostsince 2010, to 2.21 million.

Other details

The U-6, or underemployment rate, held at 7.3 percent; the gaugeincludes part-time workers who'd prefer a full-time position andpeople who want a job but aren't actively looking. Privateemployment rose by 236,000 after increasing 179,000; governmentpayrolls climbed by 27,000.

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