Employers ramped up hiring in March, driving the unemployment rate down to 4.4 percent, matching a five-year low. It was a surprisingly strong performance in an economy that has otherwise shown signs of sluggishness recently.
The new snapshot, released by the Labor Department on Friday, also showed that employers boosted their payrolls by a strong 180,000 in March, the most since December. Workers’ also saw their paychecks get bigger. The fresh figures suggested that companies are not feeling a need to dramatically clamp down on hiring in the face of the slower overall economic activity and the deep housing slump.
“There’s been worry that housing troubles would seep into the rest of the economy and hurt jobs but that is not happening now,” said Bill Cheney, chief economist at John Hancock Financial Services. “This says employers are finding that they need people and when they need people they hire them. These are good, healthy numbers,” he said.
The report was stronger than economists were expecting. They were calling for the economy to add around 135,000 new jobs in March, and for the unemployment rate to actually edge up to 4.6 percent.
The 4.4 percent unemployment rate, which dropped down a notch from 4.5 percent in February, matched the rate in October, which was the lowest in five years.
Jobs gains in March were fairly widespread, except for the struggling manufacturing sector, which continued to shed jobs for the ninth month in a row; factories cut 16,000 in March alone. Some business services also trimmed jobs, by 7,000 last month.
Construction companies, after suffering heavy job losses in February in part due to lousy winter weather, bulked up in March. They added 56,000 positions last month, the most in just over a year. Retailers added nearly 36,000 jobs last month. Education and health care services expanded employment by 54,000. Leisure and hospitality picked up 21,000 new jobs, while the government added 23,000.
“I think the American people — our workers, our companies, small businesses, entrepreneurs — should feel very proud of these results. These numbers show we are competing successfully in a very competitive global economy,” Commerce Secretary Carlos Gutierrez said in an interview with The Associated Press.
Asked about the weakness in factory employment, Gutierrez said: “Any job lost is painful. ...We need to stay focused on job training and preparing ourselves” for an even more competitive climate in the future.
Adding to the positive showing, job gains in January and February turned out to be stronger than previously reported. The economy added 113,000 positions in February, up from a prior estimate of just 97,000, which had marked the slowest job growth in two years. In January 162,000 new jobs were created, better than the 146,000 previously reported.
Workers’ wages grew modestly.
Average hourly earnings rose to $17.22 in March, a 0.3 percent increase from February. That matched economists’ expectations. Over the last 12 months, wages grew by 4 percent.
Solid wage growth is good for workers and supports consumer spending, which is indispensable to the economy’s good health. But a rapid pickup — if prolonged and not blunted by other economic forces — can raise fears about inflation.
Spiraling inflation would whittle away any wage gains, hurting workers’ wallets. It isn’t good for the economy, either.
One of the things the Federal Reserve is keeping close tabs on is inflation. Another is business investment, which has been weak. Those economic crosscurrents complicate the Fed’s job of keeping the economy and inflation on an even keel.
The Fed’s key interest rate hasn’t moved since August. Before that, the Fed was steadily raising rates for two years to fend off inflation.
The new figures comes as President Bush continues to cope with a lackluster job-approval rating of 35 percent from the American public, according to a new AP-Ipsos poll. On the economy, the just 38 percent approve of the president’s economic stewardship, while 60 percent disapprove, the poll shows.
Tapping into that discontent, Democrats are championing policies to close the gap between low- and high-income workers, make it easier for workers to form unions against company wishes and taking a harder stance with respect to the Bush administration’s free-trade deals.
Beyond March’s employment report, there were some challenges for jobseekers, however. For one thing, the job hunt got longer.
The average time that the 6.7 million unemployed people spent in their job searches was 17.3 weeks in March, compared with 16.4 weeks in February.
Economists predict the economy will remain in a sluggish spell in the months ahead. For the recently ended January-to-March quarter, some analysts are predicting growth will clock in at close to 2 percent, which would represent a further slowing from the 2.5 percent growth rate logged in the final three months of last year.
As the economy slows, the unemployment rate also is expected to creep up, reaching close to 5 percent by the end of the year.
Federal Reserve Chairman Ben Bernanke believes the economy is working its way through a soft patch and won’t fall into a recession this year. However, former Fed chief Alan Greenspan has put the odds of the economy sliding into a recession this year at one-in-three.