OTTAWA - The Canadian economy got a double-barreled blast of good news Friday, with both the domestic and U.S. labour markets reporting stunning job creation gains for April that augur well for the recovery.

Canada gained 108,700 new jobs, the biggest one-month nominal pick-up on record and the biggest in percentage terms since August 2002.

Meanwhile, the U.S. labour market came out of it's two year stall with a 290,000-job gain as American employers finally joined the recovery.

In both the U.S. and Canada, the hundreds of billions of dollars in combined stimulus spending -- on everything from sewers, bridges, roads and buildings -- is creating jobs in related industries such as construction, trade, retail and services.

The strong housing market in Canada is also underpinning the construction and financial services industry, but higher mortgage rates are starting to slow that growth.

One of Canada's best-known labour leaders worried whether the jobs recovery can be sustained when the government stimulus spending taps run dry next year.

"This is the long-awaited boost from economic stimulus spending, with full-time jobs coming in construction and being taken up by the group hit hardest by the recession --- men over 25," said Ken Georgetti, president of the Canadian Labour Congress.

"These jobs are welcome and needed, but we shouldn't fool ourselves; these jobs are also temporary. When the stimulus spending runs out, and interest rates on mortgages go even higher, what's left?"

As massive and unexpected as Canada's improvement was -- to some the number was too good to take fully on faith -- the U.S. may prove the most encouraging.

"Clearly what happened in the U.S. will have a greater impact because of the important link we have," said TD Bank economist Millan Mulraine. "The sticker price of 290,000 suggests the private sector is finally revving up their job creation and that changes the tone."

Weakness in the U.S. domestic economy is one of the key factors the Bank of Canada, and private sector economists, have cited for low growth expectations in Canada over the next few years.

BMO Capital Markets economist Douglas Porter cautioned against taking the 108,700 jobs number literally, noting that survey's have margins of errors.

"I do believe we had a solid month of job growth in April, however," added Porter.

Economists note that the employment surge was consistent with other data that shows Canada's economy growing at a clip of between five and six per cent over the past six months.

But markets continue to remain nervous over the unfolding Greek government debt crisis, despite German parliament's approval of its portion of a massive bailout package Friday.

The Canadian dollar soared on the employment news, which was released at 7 a.m. EDT, gaining more than a cent from Thursday's 95.03 cents US close, then gave it all back by mid-morning.

Markets in Toronto and New York were again substantially lower Friday morning after Thursday's wild ride, which can only partially be explained by what many believe was a human or technical error. In mid-afternoon trading Thursday, the New York exchange fell 565 points in a matter of minutes, only to see the value restored almost as quickly.

Despite ongoing nervousness, Scotia Capital economist Derek Holt said there is reason to believe the Greece's problems could be contained as a regional problem that will have little lasting impact on the North American economy.

On the margins, if the crisis is contained, Holt said the impact may be positive for Canada in the sense that it could restrain interest rate increases and the loonie.

"I'm not entirely convinced that Greece and some of the peripheral economies in Europe can take down the North American economy, especially with job numbers like this," he said.

But Porter noted European waves could cross the Atlantic if financial markets get spooked, as they clearly did Thursday.

With such a push-and-pull of forces, analysts speculated that Bank of Canada governor Mark Carney won't make up his mind about whether to raise interest rates next month until more data, and more evidence of market calm is in.

"We had a real whiff of fear yesterday, so what the hurry to raise rates?" asked Porter.

April's shower of jobs suggests the hand-off from government hiring to the private sector is in full swing, at least in Canada.

Since last July, when employment began turning positive after months of retreat, Canada has recouped 285,000 -- or 68 per cent -- of the jobs lost during the recession. All of April's gain and more than half of new jobs since July were in the non-government sector.

Economists were also encouraged that the underlying data was almost as impressive as the headline. Almost half, 44,000 were full-time work and almost all involved hiring rather than self-employment.

Another encouraging signal was that 92,000 more Canadians felt good enough about their prospects that they began looking for work in April, which helped keep the jobless rate from dropping further than 8.1 per cent.

Economists had been expecting a modest 25,000 pick-up, with some leaning toward the lower range in expectation that the wind-down of activities surrounding the Olympics would show up in the employment data.

But the post-Olympic swoon was minimal, with only a 13,600 loss in the food services and accommodation sector.

Most industries, with the notable exception of manufacturing, posted gains. And all provinces were in the plus column, Ontario leading the way with a 40,500 increase.

The largest employment increases were in retail and wholesale trade, business, building and other support services, construction, and information, culture and recreation. The big disappointment was the factory sector, which had been showing signs of revival of late, but dropped 21,000 workers in April.