The economy added 216,000 jobs in March and unemployment dropped from 8.9 percent to 8.8 percent.
The gains beat expectations the economy would add 200,000 jobs and is the strongest sign yet that companies are returning to full hiring mode after the recession.
The news comes as Democrats and Republicans continue a standoff over spending levels for 2011. If a deal is not reached, the government would shutdown after April 8, which could have a negative impact on the economy.
The White House hailed the new figures, with Austan Goolsbee, chairman of the Council of Economic Advisers, saying in a statement that the "steep decline in the jobless rate and the solid employment growth in recent months are encouraging."
He said the growth is a sign that the payroll tax cut and business incentives for investment put in place by the administration "are creating the conditions for sustained growth and job creation."
House Republicans also put the numbers in a positive light, with House Majority Leader Eric CantorEric CantorGOP shifting on immigration Breitbart’s influence grows inside White House Ryan reelected Speaker in near-unanimous GOP vote MORE's (R-Va.) spokesman emailing reporters a story headlined "Jobs report signals improving economy."
Business leaders have suggested a government shutdown could threaten the recovery signaled by Friday's report.
A Business Roundtable survey of CEOs earlier this week found rising confidence in the economy, with most executives expecting to either add jobs or keep their current workforce for the next six months. But Roundtable representatives warned these results would be shunted aside if there is a government shutdown, which could disrupt supply chains, shake markets and even lead to increased interest rates.
A shutdown would also stop paychecks to thousands of federal workers, and it is uncertain whether any would receive retroactive pay.
Speaker John BoehnerJohn BoehnerFormer House leader Bob Michel, a person and politician for the ages Former House GOP leader Bob Michel dies at 93 Keystone pipeline builder signs lobbyist MORE (R-Ohio) in a statement on the jobs report blamed Senate Democrats for the impasse, saying they had done nothing to move a spending bill "except root for a government shutdown."
"Excessive government spending continues to create economic uncertainty, erode confidence in our economy and crowd out the investment that fuels private-sector job creation," BoehnerJohn BoehnerFormer House leader Bob Michel, a person and politician for the ages Former House GOP leader Bob Michel dies at 93 Keystone pipeline builder signs lobbyist MORE said in pressing for agreement on the House-approved government funding bill that would cut spending by $61 billion this year and defund the new healthcare law and Planned Parenthood.
Democrats have blamed Tea Party conservatives for handcuffing GOP leaders, who they say are unwilling to compromise because of demands from the right to not budge from the House-approved bill. The White House and Senate Democrats have floated a proposal to cut spending this year by $33 billion, and appropriations staff are negotiating toward that target, a source close to the talks told The Hill this week.
But provisions to repeal the healthcare law, Planned Parenthood and other priorities of the Obama administration are sticking points in the talks.
The Labor Department report showed that job gains occurred in professional and business services, healthcare, leisure and hospitality and mining. Employment in manufacturing also trended up, according to the report.
Local government employment continued to fall, as cash-strapped states, counties and cities continued to lose workers. Local government offices have lost 416,000 workers since September 2008.
This story was first posted at 6:16 a.m. and updated at 8:36 a.m. and 10:01 a.m.