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News : US Economy Last Updated: Apr 4, 2011 - 4:11 AM


US economy continued to add jobs in March providing signs of an improving economy
By Finfacts Team
Apr 1, 2011 - 3:25 PM

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The US economy continued to add jobs in March, pushing down the unemployment rate to its lowest level in two years and providing signs of an  improving economy.

Nonfarm payroll employment increased by 216,000 in March, and the unemployment rate was little changed at 8.8%, the US Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, leisure and hospitality, and mining. Employment in manufacturing continued to trend up.

The number of unemployed persons (13.5m) and the unemployment rate (8.8%) changed little in March. The labor force also was little changed over the month. Since November 2010, the jobless rate has declined by 1.0 percentage point.

The broad measure of unemployment fell to 15.7%.

Among the major worker groups, the unemployment rates for adult men (8.6%), adult women (7.7%), teenagers (24.5%), whites (7.9%), blacks (15.5%), and Hispanics (11.3%) showed little change in March. The jobless rate for Asians was 7.1%, not seasonally adjusted.

The number of job losers and persons who completed temporary jobs, at 8.2m, was little changed in March but has fallen by 1.3m since November 2010. The number of long-term unemployed (those jobless for 27 weeks or more) was 6.1m in March; their share of the unemployed increased from 43.9 to 45.5% over the month.

In March, the civilian labor force participation rate held at 64.2%, and the employment population ratio, at 58.5%, changed little.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in March, at 8.4m. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

In March, 2.4m persons were marginally attached to the labor force, up slightly from a year earlier. (These data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 921,000 discouraged workers in March, little changed from a year earlier. (These data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.5m persons marginally attached to the labor force in March had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

In March, employment in the service-providing sector continued to expand, led by a gain of 78,000 in professional and business services. Most of the gain occurred in temporary help services (+29,000) and in professional and technical services (+35,000).

Health care employment continued to increase in March (+37,000). Over the last 12 months, health care has added 283,000 jobs, or an average of 24,000 jobs per month.

Employment in leisure and hospitality rose by 37,000 over the month, with more than two-thirds of the increase in food services and drinking places (+27,000).

Manufacturing employment continued to trend up in March (+17,000). Job gains were concentrated in two durable goods industries - - fabricated metal products (+8,000) and machinery (+5,000). Employment in durable goods manufacturing has risen by 243,000 since its most recent low in December 2009.

In March, employment in mining increased by 14,000, with much of the gain occurring in support activities for mining (+9,000).

Employment in local government continued to trend down over the month. Local government has lost 416,000 jobs since an employment peak in September 2008.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.3 hours in March. The manufacturing workweek for all employees edged down by 0.1 hour to 40.5 hours, while factory overtime was unchanged at 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls increased by 0.1 hour to 33.6 hours.

In March, average hourly earnings for all employees on private nonfarm payrolls were unchanged at $22.87. Over the past 12 months, average hourly earnings have increased by 1.7%. Average hourly earnings of private-sector production and nonsupervisory employees edged down by 2 cents over the month to $19.30.

The change in total nonfarm payroll employment for January was revised from +63,000 to +68,000, and the change for February was revised from +192,000 to +194,000.

Professor Peter Morici of the University of Maryland commented: "These gains are in sharp contrast to weaker gains the previous 13 months, and largely resulted from stronger, potentially self-sustaining private sector jobs growth.

As measured by GDP, the economic recovery began in July 2009; however, the economy did not begin adding jobs until January 2010, and gained only 76,000 jobs a month through January 2011. Too many of those jobs gains were created by stimulus spending, temporary business services, and health care and social services, which are heavily subsidized by federal and state governments. Job gains in the core private sector—private employment less temporary business services, and health care social services and temporary business services--averaged only 47,000 a month.

Core private sector jobs are so important, because those have the potential to set off a virtuous cycle of hiring, consumer spending and more hiring. In March and February, this barometer of private sector vitality gained 183,000 and 157,000 new positions, respectively. Similarly strong core private sector gains will be needed to continue adding 200,000 or more new jobs each month going forward.

The jobs drought may finally be over but important challenges remain.

Gains in the range of 200,000 a month are not enough to push unemployment down to acceptable levels. Continued dependence on foreign oil, the growing trade deficit with China, and health care and tax policies that penalize the location of businesses in the United States are responsible for slower jobs creation than has been accomplished during past recoveries and that could still be achieved.

The economy must add 13m private sector jobs over the next three years - - 360,000 each month -- to bring unemployment down to 6%. Core private sector jobs must increase at least 300,000 a month to accomplish that goal.

The economy is expanding at a 3% annual rate and this is barely enough to hold unemployment steady, because the working age population increases 1% a year, and productivity advances about 2%. Growth in the range of 4 to 5% is needed and possible to get unemployment down to 6% over the next several years.

Coming out of a deep recession, growth of 4 to 5% a year is certainly possible. However, continued dependence on high priced foreign oil, the growing trade deficit with China, and health care and tax policies that penalize the location of businesses in the United States are responsible for slower jobs creation than has been accomplished during past recoveries and that could still be achieved.

Simply, more jobs could be created by drilling for more domestic oil now, which would keep money here that American drivers send to the Middle East; taxing dollar-yuan conversion to offset China’s undervalued currency and 35% subsidy on its exports; genuine health care reform that lowers drug, insurance administration and tort burdens rather than subsidizing a system that costs 50% more than private systems in Germany and elsewhere; and replacing the corporate income tax and elements of the personal income and social security tax with a value-added tax."

US employment recorded a second straight month of solid gains in March, with CNBC's John Harwood:

Hilda Solis, Labor Secretary, discusses the stronger-than-expected March jobs report:

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