steam

The U.S. economy creates jobs at the fastest pace in 9 months and the jobless rate drops to an almost 3-year low, raising hopes that the labor market is picking up steam.

The American economy picked up steam last quarter, with output growing at an annualized rate of 2.8 percent, a faster rate than the 1.8 percent of the third quarter.

The United States added a robust 200,000 new jobs last month, the Labor Department said, in a sign that the economic recovery was gaining momentum.

Stocks kicked off 2012 with a sharp rally on Tuesday after data showed U.S. manufacturing activity and construction spending picked up, signaling the recovery was gaining steam.

Employers added 244,000 jobs in April, all the net gain coming from the private sector. As more people returned to the job hunt, the unemployment rate rose to 9.0 percent.

The U.S. economy added 192,000 jobs in February, in line with expectations, the fastest job growth since last spring.

The rate of unemployment ticked down to 8.9 percent.

The Federal Reserve called for growth of 3.4 percent to 3.9 percent this year, up from 3 percent to 3.6 percent, even though unemployment will remain painfully high.

With earnings continuing to surprise and minimal technical resistance ahead, the bears may have to wait a bit longer for the much-anticipated end to the current stock rally.

Stock index futures were little changed on Monday as investors assessed whether a rally that started about two months ago had any more steam left.

Overall U.S. economic activity is still increasing but not robustly and in a few districts has lost steam over the past several weeks, the Federal Reserve said Wednesday.