US reports solid job growth as winter's grip loosens

US employers maintained a solid pace of hiring for a second straight month in March - further evidence of resilience in an economy that had been held back by a brutally cold winter.

 

Nonfarm payrolls increased by 192,000 jobs last month after rising 197,000 in February, the Labor Department said on Friday. The unemployment rate held at 6.7 per cent, a tick above January's five-year low, as Americans flooded the labour market.

 

"This is a nice number, one of those Goldilocks numbers that is decent but not so good that it gets fears going about interest rates or the economy growing too quickly," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

 

US stock index futures extended gains and yields on US Treasury debt fell after the jobs data. The dollar slipped against a number of currencies.

 

The smaller survey of households from which the unemployment rate is derived showed a surge in employment. That jump was met by a rise in the number of people entering the labour force, a show of confidence in the jobs market.

 

The labour force participation rate, or the proportion of working-age Americans who have a job or are looking for one, rose to a six-month high of 63.2 per cent from 63 per cent in February.

 

The percentage of working-age Americans with a job, a broad gauge of labour market health, increased to 58.9 per cent last month, the highest level since the summer of 2009.

 

In further bullish signs for the economy, the length of the workweek increased to 34.5 hours from an average of 34.2 hours in February. The payrolls count for January and February was revised to show 37,000 more job created during those months than previously reported.

 

Economists polled by Reuters had expected employment to increase 200,000 last month and the unemployment rate to fall one-tenth of a percentage point.

 

"They're good. You're quibbling over a pretty small differential. It looks like the party goes on," said Rick Meckler, president of Liberty View Capital Management in Jersey City, New Jersey.

 

An unusually cold and snowy winter slammed the economy at the end of 2013 and the beginning of this year. Growth was further undercut by efforts by businesses to trim bloated inventories, the expiration of benefits for the long-term unemployed and cuts to food stamps.

 

But data ranging from manufacturing and services sector activity to automobile sales have signalled strength in the economy as the first quarter ended.

 

Highly accommodative policy

 

The steady pace of job gains should allow the Federal Reserve to continue scaling back its monetary stimulus and keep overnight interest rates near zero for a while.

 

Fed Chair Janet Yellen has argued the central bank needs to maintain a highly accommodative monetary policy for some time to eliminate slack in the labour market.

 

The private sector accounted for all the employment gains in March, with the government sector adding no jobs. The private sector has now recouped all the jobs lost during the recent recession.

 

Manufacturing payrolls fell 1,000, breaking seven months of gains. Factory job growth has been slowing since surging in November. But with auto sales accelerating sharply in March, hiring could rebound in the months ahead.

 

Construction employment increased by 19,000. It was the third consecutive month of job gains for the sector and occurred despite the housing market's struggles to climb out of a soft patch. Average hourly earnings dipped by a cent in March.

 

Copyright @ Thomson Reuters 2014