The labor market bounced back resoundingly in December as employers added 312,000 jobs, easing fears of a recession and sending the stock market surging higher Friday.

The unemployment rate rose from a 50-year low of 3.7 percent to 3.9 percent as an additional 419,000 Americans began working or looking for jobs, many of them drawn in to the labor force by a strong job market, the Labor Department said Friday. Economists expected 181,000 job gains, according to a Bloomberg survey.

The strong report drove up the Dow Jones industrial average by 747 points, or 3.3 percent, to end Friday at 23,433. The blue-chip average's gains erased the rout from the previous day.

Other stock market gauges also jumped. The broader Standard & Poor's 500 stock index closed 84 points higher, or a gain of 3.4 percent, to 2,532. The tech-heavy Nasdaq finished 275 points higher, or an increase of 4.3 percent, to 6,739. The performance pulled the index out of a bear market, a 20-percent or more decline from its recent closing high.

The rebound follows a rough Thursday for stocks after Apple cut its revenue forecast amid slowing sales in China, and a private survey revealed a sharp drop in U.S. manufacturing activity.

Harsh weather held down job growth in November and some of December’s vigorous showing can be chalked up to a predictable rebound as idled workers returned, especially in sector such as construction and restaurants. But the outsize payroll gains appears to reflect aggressive hiring that far exceeds those weather effects.

Also encouraging: Payroll increases for October and November were revised up by a total 58,000. October’s was revised from 155,000 to 176,000 and November’s, from 237,000 to 274,000.

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"Despite recent stock market volatility, the underlying economy is strong and growing," says Andrew Chamberlain, chief economist of Glassdoor, the giant job-posting site.bbb

An armada of worries have stirred concerns about the economy and pulled down stocks in recent months, including Federal Reserve interest rate hikes, the Trump administration’s trade war with China and a slowing global economy. The strong jobs report to close out 2018 comes as a welcome balm.

The partial government shutdown, which began last month, has further unnerved investors, though the idling of 400,000 federal workers didn’t affect the December jobs figures because Labor conducts its survey earlier in the month.

Other forces, however, were expected to have an impact. Since snowstorms in the Northeast and Midwest curtailed employment by about 20,000 in November, Goldman Sachs expected a similar-size rebound last month. At the same time, the early Thanksgiving pulled forward seasonal retail hiring, possibly reducing job gains in that sector by about 10,000 in December, the research firm said.

More generally, Barclays expects average monthly job growth to slow from 220,000 in 2018 – the best performance since 2015 – to about 160,000 this year. The low unemployment rate is making it harder for employers to find qualified workers. And the effects of the tax cuts and spending increases passed by Congress will likely start fading, economists say.

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Wage growth picks up

Average hourly earnings rose 11 cents to $27.48, nudging up the annual gain from 3.1 percent to a new nine-year high of 3.2 percent.

Businesses are expected to continue to boost pay more sharply as they bid up to attract a smaller pool of workers. That could intensify the dilemma facing the Federal Reserve. Rising wages could fuel faster inflation, leading the Fed to stay on course to lift interest rates twice this year. But markets now expect Fed officials to further dial back any rate hikes in light of the market turbulence and mounting concerns about a slowing economy.

Labor force participation hits 15-month high

The share of American adults working or looking for jobs rose from 62.9 percent to 63.1 percent, highest since September 2017, as more Americans on the sidelines, including discouraged workers and retirees, returned to a labor market offering more jobs and higher wages.

Eventually, the labor force participation rate is expected to resume its longer-term decline as millions of baby boomers continue to retire.

Industries that are hiring

Health care led the broad-based job gains with 58,000. Leisure and hospitality, which includes restaurants and bars, added 55,000; professional and business services, 43,000; and retailers, 24,000.

Construction added 38,000 jobs after not adding any in November. And manufacturers added 32,000 despite the Trump administration’s trade fight with China, seeming to defy a manufacturing index out this week that revealed the weakest performance in more than two years. The reported contributed to Thursday’s market selloff.

What it means

There’s little not to like in the December jobs report. The whopping employment gains were the stronger since early this year. Wage growth picked up to a new nine-year high. And the unemployment rate rose for a good reason Americans on the margins streamed into an improving labor market.

The report, however, makes the Fed’s rate-hike decisions even harder, with the strong job gains and faster pay increases suggesting inflation may pick up while volatile markets have dampened consumer and business confidence.

“This all puts the Fed in an awkward position,” says Ian Shepherdson, chief economist of Pantheon Macroeconomics.