Experts say the job data shows that the recovery is making progress and should erase fears of a double dip recession - even if that progress is slow.
"The jobs report underscores this is a resilience of the recovery," said Lakshman Achuthan, managing director of Economic Cycle Research Institute. "When the business cycle is in an upswing, it starts to feed on itself, and the economy can withstand a pretty big shock without being tipped into a new downturn."
Separately, fewer Americans filed claims for unemployment benefits for the third consecutive week, in a sign the labor market is slowly recovering from the worst recession since the 1930s.
Productivity rose at a 3.6% annual rate in the first quarter, exceeding the 2.6% median forecast of economists surveyed by Bloomberg News but down sharply from 6.3% in the previous three months.
That makes a pretty compelling case for what some analysts are calling a "V-shaped" recovery. But even with all the momentum the economic recovery has accrued, that kind of talk may be a bit premature.
To help us interpret the jobs report of last week, I turned to my favorite independent labor analysts, Philippa Dunne and Doug Henwood. Here's their view of the latest numbers, which they considered the most positive in months - despite the many problems highlighted by the latest jobs report.
Employers unexpectedly shed 85,000 jobs in December, displaying a lack of confidence in the economic recovery and leaving the "official" unemployment rate at 10%.
However, the real rate of unemployment -- which includes part- time workers who want full-time jobs and people who want work but have simply stopped looking -- rose to 17.3% from 17.2%.
A panel of 48 economists surveyed by the National Association for Business Economics (NABE) showed gross domestic product (GDP) in the United States will grow by 3.2%, but job losses won't bottom until the first quarter of next year. A previous NABE forecast said employers would add 12,000 to payrolls in that quarter.
The news sent the stock markets soaring as the Dow Jones Industrial Average rose 204.05 points, or 2.08%%, to close at 10,006.19, while the Standard & Poor's 500 Index popped 20.13 points, or 1.92%, to close at 1,066.63 and the Nasdaq Composite Index gained 49.8 points, or 2.42%, to close at 2,105.32.
Business productivity rose a higher-than-expected 9.5%, its fastest pace in six years, as companies squeezed more output from fewer workers. A survey of analysts by Reuters had projected productivity, or output per hour per worker, to rise at a 6.4% rate in the third quarter.