MercoPress. South Atlantic News Agency

US unemployment reaches 5 year low: 4.7%

The US economy created 211,000 jobs in March, as the unemployment rate dropped to 4.7% according to a government report that President George W. Bush said revealed an “economic resurgence”.

The "non-farm payrolls" figure given Friday by the Labor Department, while down from a revised 225,000 in February, was well ahead of Wall Street's forecast for 190,000 extra jobs in March. The unemployment rate dropped to a five year low 4.7% in March from 4.8% in February.

"These millions of new jobs are evidence of an economic resurgence that is strong, broad and benefiting all Americans," he said in televised remarks from the White House.

Bush said the data were the product of hard work by Americans and "pro-growth economic policies", such as multi-billion-dollar tax cuts pushed through early in his administration in the teeth of Democratic opposition.

"Tax relief has done exactly what it was designed to do. It's created jobs and growth for the American people. Yet some are now proposing that we raise taxes, either by repealing the tax cuts or letting them expire," Bush said.

"These are the same politicians who told us that letting America's families keep more of their money would be irresponsible, reckless and shameful. They were wrong then and they are wrong now."

Friday's report showed that inflationary growth in wages was tame, rising 0.2% over March. Average hourly wages are up 3.4% in the past 12 months, down from 3.5% last month, and now stand at 16.49 dollars.

However fears persists that current high level of employment could boost consumption levels and raise inflation. Markets are also worried that current hiring levels could lead to inflationary pay rises, which might then encourage the Federal Reserve to raise interest rates in an effort to contain them.

The Federal Reserve is expected to raise its benchmark interest rate to 5% in May, partly because of tightening "resource utilization" in the labour markets.

The Fed has raised its key short-term interest rate 15 times since mid-2004, and many analysts believe the current rate of 4.75% marks the latter stages of its rate-rising cycle. But not all industry sectors created jobs in March: manufacturing employment fell by 5,000 after a 10,000 drop in February, while transportation firms shed 7,600 posts. Service sector businesses led the hiring, recruiting 202,000 new staff in March, following on from the 194,000 in February

Shares in Wall Street actually tumbled after the report showing stronger-than-expected US job growth highlighting investor fears about inflation and higher interest rates. The Dow Jones Industrial Average fell 96.46 points (0.86%) to close at 11,120.04, while the Nasdaq composite shed 22.15 points (0.94%) to 2,339.02. The broad-market Standard and Poor's 500 index retreated 13.54 points (1.03%) to 1,295.50.