American employers added more workers to payrolls in October than economists projected as the world's largest economy powered through the federal government shutdown.

The gain of 204,000 workers topped the most optimistic forecast in a survey of economists and followed a 163,000 increase in September that was larger than initially estimated, Labor Department figures showed today in Washington. The jobless rate rose to 7.3 percent from an almost five-year low.

"The government shutdown really didn't have a material impact on employment," said Brian Jones, senior U.S. economist at Societe Generale in New York, whose forecast for a payroll gain of 175,000 was the highest in the Bloomberg survey. "The labor market is actually quite healthy, regardless of what people may think. The economy is doing better."

The figures indicate employers were increasing hiring to meet greater demand as they looked past the 16-day budget impasse and a debate over raising the nation's debt ceiling. Speculation that the report will prompt the Federal Reserve to accelerate a withdrawal of stimulus caused Treasuries to sink the most in three months, gold to slide and the dollar to strengthen.

The yield on 10-year Treasuries jumped 15 basis points to 2.75 percent at 4:03 p.m. in New York. Gold futures dropped 1.6 percent to $1,287.70 an ounce. The Standard & Poor's 500 Index rose 1.3 percent, the most in three weeks. The dollar climbed 0.4 percent against the euro.

The median forecast of 91 economists surveyed by Bloomberg called for a gain of 120,000 jobs, with estimates ranging from increases of 50,000 to 175,000. The report, delayed by the shutdown, was originally slated for Nov. 1.

David Fuller's view For today, at least, this jobs report reduced fears of a deflationary slowdown. Next week investors may worry about QE tapering. We have a nervous environment which is likely to persist for the lengthy medium term. Nevertheless, equity investors should continue to find that downside risk is cushioned somewhat by very accommodative monetary policies.