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Unemployment rate falls to 8.8%, marking a two-year low
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WASHINGTON (AP) — The unemployment rate fell to a two-year low of 8.8 percent in March and companies added workers at the fastest two-month pace since before the recession began.
The Labor Department reported Friday that the economy added 216,000 new jobs last month, offsetting layoffs by local governments. Factories, retailers, education, health care and an array of professional and financial services expanded payrolls.
The second straight month of brisk hiring is the latest sign that the economy is strengthening nearly two years after the recession ended.
Private employers, the backbone of the economy, drove nearly all of the gains. They added 230,000 jobs last month, on top of 240,000 in February. It was the first time private-sector hiring topped 200,000 in back-to-back months since 2006 — more than a year before the recession started.
The unemployment rate dipped from 8.9 percent in February to 8.8 percent in March. The rate has fallen a full percentage point over the last four months, the sharpest drop since 1983.
“The U.S. labor market is finally making some serious progress. No fooling,” said Sal Guatieri, economist at BMO Capital Markets Economics.
Economists predict employers will add jobs at roughly the same pace for the rest of this year. That would generate about 2.5 million new positions. But that will make up only a small portion of the 7.5 million jobs that were wiped out during the downturn.
One reason for the lower unemployment rate is that many people who stopped looking for a job during the recession still aren’t looking for one. So they’re not counted as unemployed. The proportion of people who either have a job or are looking for one is surprisingly low for this stage of the recovery.
If many of them start looking for work again, they will be counted as unemployed. So the unemployment rate could go up, even if the economy adds jobs.
And the economy faces pitfalls. Local governments, wrestling with budget shortfalls, cut 15,000 workers last month and are expected to keep shedding jobs. Home prices are falling amid weak sales and a record number of foreclosures. Higher food and gas prices are leaving consumers with less disposable income to spend on other goods and services.
Workers’ paychecks were flat in March. Average hourly earnings held steady at $22.87, unchanged from February. Workers have little bargaining power to demand big pay raises because the job market is still healing slowly.
The number of unemployed people dipped to 13.5 million in March, still almost double since before the recession began in December 2007.
Including part-time workers who would rather be working full time, plus people who have given up looking altogether, the percentage of “underemployed” people dropped to 15.7 percent in March.
Professional and business services, including accountants, bookkeepers, engineers and computer designers, added 78,000 positions, the most since November. Of those, 29,000 were temporary positions.
Factories added 17,000 jobs in March, marking the fifth straight month of gains. Retailers added nearly 18,000 jobs, after cutting them in February. Financial services expanded payrolls by 6,000, following two straight months of cutbacks. Education and health services expanded employment by 45,000, leisure and hospitality added 37,000 jobs.
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