The economy added 165,000 jobs in April as unemployment fell to 7.5 percent, allaying fears that the slow recovery might be coming unglued.
Many economists expected the U.S. economy to add 153,000 jobs in April with the unemployment rate unchanged.
The Labor Department had previously reported a disappointing 88,000 jobs added in March with an unemployment rate of 7.6 percent. But Friday's report revised the number of jobs added that month to 138,000, and those added in February to 332,000 from 268,000.
JJ Kinahan, chief derivatives strategist of TDAmeritrade, said today's report was better than expected and even beat the early, higher estimates this week.
He added that the markets are reacting positively to the unemployment rate, which is the lowest since May 2010. Stocks surged on the news with the Dow Jones adding 165 points to top 15,000 for the first time ever and the S&P 500 passing an all-time high.
"There are some big takeaways here, one of the biggest being that as happens in healthy economies, the government lost some jobs and the private sector added jobs," he said.
Kevin Dunning, U.S. Analyst for The Economist Intelligence Unit, said the unemployment rate fall to 7.5 percent in April would have been stronger, but for the increase of 210,000 people in the labor force.
"This is encouraging, because it suggests that previously discouraged workers are returning to the jobs market on the back of better prospects now," he said.
Kinahan said it is possible that the addition of more workers contributed to the decrease in the average workweek, which fell by 0.2 hours in April to 34.4 hours.
Previously, economists were concerned about the economic effects of sequester budget cuts, higher taxes and uncertainty over the health care laws.
"Businesses are having current workers work more hours while being reluctant to hire new workers," Kinahan said.
On Wednesday, a survey by payroll company ADP showed a dismal picture of unemployment. The survey showed U.S. employers added 119,000 jobs in April, the fewest in seven months.
Kinahan said a significant revision in last month's report was the addition of more retail jobs than was evident last month, which showed weakness in the industry. The retail industry added 29,000 jobs in April, the Labor Department reported.
"The strength of jobs growth goes some way to explaining the resilience of the U.S. consumer in the first quarter," said Dunning. "Even though disposable income was reduced by tax rises, many more workers obtained new jobs and new income streams."
Kinahan also had his eyes on the addition of construction jobs in Friday's report, but Friday's report showed little change in construction over the month. The construction sector gained an average of 27,000 jobs per month over the last six months, the Labor Departed reported today.
"We've seen decent housing numbers, but we want to see if that's going to jive with workers," Kinahan said.
The S&P/Case-Shiller Home Price Index, released on Tuesday, showed the seasonally adjusted 20-city index rose for the 13th straight month in February.