Job growth hits four-year high

Job growth soared to a four-year high of 308,000 last month after languishing for three years, the Labor Department reported yesterday.

Job growth last month was so strong it drew 179,000 more people into the market looking for work, causing the unemployment rate to tick up to 5.7 percent from 5.6 percent. White unemployment was pegged at 5.1 percent, black unemployment at 10.2, and Hispanic or Asian at 7.4 percent.

The report showed that two-thirds of the 759,000 new jobs created since August of last year occurred in the past three months.

Yesterday’s news sparked market rallies on Wall Street and worldwide as investors concluded the recovery of the world’s largest economy may finally have taken hold. The Dow Jones Industrial Average gained 97 points, while the U.S. dollar surged against other world currencies as investors poured money into U.S. markets.

“It’s a breakthrough report,” said Wachovia Securities chief economist John Silvia. It shows employers starting to hiring full-time staff instead of falling back on hiring temporary workers and lengthening work hours to accommodate increased sales.

The pickup in job growth dispels most lingering doubts about whether the recovery will last. More jobs and income means consumers will have more money to spend, providing a stable source of growth for the economy.

Last month’s job gains were broad-based in construction and nearly every service trade, from health care to retailing to mortgage brokering. Manufacturing reported no jobs gains, but recorded no job losses for the first time since August 2000.

“Labor markets have finally turned the corner,” said Richard Berner, chief U.S. economist with Morgan Stanley. “The improvement over the past three months buttresses the case for a sustainable recovery.”

Consumers may need to see more job growth to recover lost confidence, Mr. Berner said, but the good news is likely to continue with a proliferation of jobs in the months ahead.

The department reported no new temporary hiring during the month, and the average workweek declined by six minutes to 33.7 hours. Average wages picked up modestly to a 1.8 percent gain over the past year, from 1.6 percent reported in February.

Mr. Silvia said he hopes the report will help to focus the raging political debate about jobs in the United States on “more fruitful topics,” such as how to retrain 2 million long-term unemployed workers and educate children so they can get better jobs in the future.

“Let’s drop the rhetoric about how to restore jobs that are gone,” he said, referring to the 2 million jobs, most in manufacturing, lost since the 2001 recession.

While manufacturing companies appear to be gearing up to start hiring again, economists say the shrinkage in the manufacturing work force is part of a decades-long trend since World War II that always gets worse during recessions.

Lost manufacturing jobs by and large are being replaced by services jobs in growth areas such as finance, health care and education. As in the past, workers from industries that have relocated overseas will have to retrain and sometimes relocate to areas that are thriving, Mr. Silvia said.

Both President Bush and his presumptive Democratic opponent, Sen. John Kerry, have offered measures to help retrain unemployed workers and boost lagging performance in the education system.

There was one glum footnote to the day’s sunny news. The report showed that the picture has not brightened much for the nearly one-quarter of jobless people who have been looking for work for six months or longer. Their number remains at a 20-year high.

“Even with March’s positive payroll news, the economy has a long way to go to create enough jobs to get us out of the deep hole of long-term joblessness,” said Andrew Stettner, an analyst at the National Employment Law Project.

“Overall, payroll growth has averaged only 108,000 jobs over the last seven months — far short of what would be expected during a strong growth period,” he said.

Federal Reserve Chairman Alan Greenspan and other experts had predicted a pickup in the jobs report because all other signs in the economy were pointing to a rapid improvement in the job market.

Among the signs of change have been a drop in new weekly jobless claims this year to prerecession levels, increasing income-tax collections, and surveys showing increased business hiring plans by Manpower Inc. and the National Federation of Independent Business.

Some economists say job growth could be explosive in the months ahead now that the recovery is gaining momentum, because a 3-year-long hiatus left businesses with pent-up demands for hiring.

Ed Yardeni, chief investment strategist with Prudential Securities, said he was not surprised by the surprisingly strong payroll report “given the uniformly upbeat readings coming from all the other labor market indicators” and historical data that show the labor report often understates job creation in the early stages of a recovery.

“The long-awaited jobs recovery appears to be under way,” he said. “We expect continued strong payroll gains ahead,” and that should be “a positive for the president’s re-election bid.”