Employment picked up more than forecast in April and the jobless rate unexpectedly declined to a four-year low of 7.5 percent, showing federal budget cuts failed to destabilize the U.S. labor market.

Payrolls expanded by 165,000 workers last month following a revised 138,000 increase in March that was larger than first estimated, Labor Department figures showed today in Washington. The median forecast of 90 economists surveyed by Bloomberg projected a 140,000 gain. Revisions added a total of 114,000 jobs to the employment count in February and March.

Hiring advanced last month even as employers witnessed the onset of planned government spending reductions, which the Federal Reserve said are hindering the economy. The expansion is projected to cool this quarter before picking up again as the cuts continue, consumer spending eases and companies pull back.

“The demise of this recovery is grossly exaggerated,” said Eric Green, global head of research at TD Securities Inc. in New York, who projected a 162,000 gain in payrolls. “We’re still in a soft patch, but the job market is not falling apart. The U.S. labor market is in much better shape than most people feared.”

Stock futures jumped after the report. Standard & Poor’s 500 Index futures expiring in June rose 0.7 percent to 1,603.70 at 8:51 a.m. in New York.

Rate Drops

Payroll projections ranged from gains of 100,000 to 238,000 following an initially reported 88,000 increase in March, according to the Bloomberg survey.

Private payrolls, which don’t include jobs at government agencies, increased by 176,000 in April after a revised gain of 154,000 the previous month. Economists forecast they would rise 150,000 following an initially reported 95,000 gain in March.

The jobless rate dropped to the lowest level since December 2008 from 7.6 percent in March. The rate, which is derived from a separate poll of households, was forecast to hold at 7.6 percent, according to the Bloomberg survey median.