By Kevin G. Hall
WASHINGTON — Employers added a robust 216,000 jobs in March as the unemployment rate dipped to 8.8 percent, the government said Friday in a better-than-expected report that showed the U.S. economic recovery is overcoming the headwinds from rising food and fuel prices.
In the best jobs report yet during the skittish recovery, the Labor Department said that private-sector employment actually rose by 230,000 during March. The broader employment numbers were dragged down by a net loss of 14,000 government jobs across the nation.
“The job market is kicking into full gear. Job growth has accelerated to 200,000 per month, which is sufficient to meaningfully bring down unemployment,” said Mark Zandi, chief economist for forecaster Moody’s Analytics. “It is also encouraging the job growth is increasingly broad-based across industries. Only state and local governments are laying off workers.”
Manufacturers added 17,000 jobs in March, the fifth straight month that they’ve boosted employment. The vigorous health care sector added almost 37,000 jobs, and the important category of professional and business services— which includes well-paying white-collar jobs— surged by 78,000.
Temporary employment, usually a harbinger of future hiring, also was up by 28,800 jobs. Even if March numbers are repeated in the months ahead, it will take a long time to erase the 8 million job losses suffered during the Great Recession of 2007-2009, the worst since the 1930s. But March suggests the recovery is taking root.
“The numbers were solid, indicating that business confidence is improving to the point where hiring is beginning to step up,” said Chris Varvares, president of forecaster Macroeconomic Advisers. “Numbers like this will generate income, increase confidence for consumers, and are the kinds of numbers we need to see on an ongoing basis to have the self-sustaining recovery and expansion that is in our forecast.”
Even though the report arrived on April Fool’s Day, Friday’s numbers were no prank. They followed by a day the close of the first quarter of 2011, when U.S. stocks surged on expectations that the U.S. economy is getting its game back.
The benchmark S&P 500 gained 5.4 percent in the first three months of 2011, the Dow Jones Industrial Average was up 6.7 percent, its best quarter since 1999, and the tech-heavy Nasdaq composite rose 4.8 percent.
The White House welcomed the strong March employment numbers.
“The full percentage point drop in the unemployment rate over the past four months is the largest such decline since 1984, and, importantly, it has been driven primarily by increased employment, rather than people leaving the labor force,” Austan Goolsbee, head of the White House Council of Economic Advisers, said in a statement. Still, he cautioned that “there will surely be bumps in the road ahead.”
Going forward, economists will be closely watching for signs of how oil prices anchored above $100 a barrel affect consumers, who account for two-thirds of U.S. economic activity. Several measures of consumer confidence soured sharply in the latter half of March as oil and gasoline prices soared.
“Higher energy and other commodity prices are the most serious threat to optimism regarding the job market and broader economy. Oil prices much above current prices for more than a few weeks will do serious damage,” Zandi warned.
Higher gasoline prices are like a tax on consumption. Shoppers may cut back on their purchases of other goods if pump prices remain high. The AAA Motor Club said the nationwide average price for a gallon of unleaded gasoline stood at $3.61, up from $3.38 a month ago and $2.80 a year ago Friday.
“While consumption has been improving in recent months, the weak growth in income coupled with the ongoing rise in gasoline prices could prompt consumers to cut back on more discretionary purchases,” said a Bank of America Merrill Lynch Global Research report Friday.
Wage growth was flat in March, the Labor Department noted. For the first three months of the year, wages grew by 1.7 percent, even as inflation advanced at a 2.1 percent annual rate.
With the U.S. recovery gathering steam and demand for materials rising, there are growing concerns that several years of low interest rates may lead to a spike in inflation. Wal-Mart U.S. CEO Bill Simon made headlines Wednesday when he warned that he expects an unprecedented spike in inflation.
Inflation is the rise of prices across the economy. Many Americans are grumbling that official measures aren’t fully accounting for how rising food and gasoline prices are eroding their spending power. While Friday’s report was encouraging, plenty of unpleasant signs remain.
“The number of long-term unemployed remained high at 6.1 million, 45.5 percent of total unemployment,” Keith Hall, commissioner of the Bureau of Labor Statistics, said in congressional testimony Friday morning. “Over the month, the number of individuals who were working part time although they would have preferred full-time work was 8.4 million, down from 9 million a year earlier.”
To some economists, the stubbornly high rate of long-term unemployed points to a serious change in economic reality.
“It is clear that some of the damage to the job market is structural. With a sizeable portion of the potential workforce being separated from employment for long periods of time, the risk is that their skills will deteriorate and thus that they will have a much more difficult time reacquiring jobs,” the Bank of America Merrill Lynch report said, suggesting the definition of full employment may rise to around 7 percent. “That said, as today’s report illustrates, there is still a high unemployment rate gap, leaving wage growth fairly muted.”
(c) 2011, McClatchy-Tribune News Service