MercoPress. South Atlantic News Agency

US jobless rate drop for second month running could indicate inflection point

Most jobs were created by the private sector, but construction employment was down

US employment recorded a second straight month of solid gains in March and the jobless rate fell to a two-year low of 8.8%, (from 8.9% in February) marking a decisive shift in the labour market.

Non-farm payrolls rose 216,000 last month, the largest increase since May, the Labour Department said. January and February employment figures were revised to show 7,000 more jobs than previously reported.

The strong job gains come amid indications the US economy suffered a minor setback early in the year as bad weather and rising energy prices dampened activity.

While the report indicated sufficient underlying strength in the economy to cushion it against the impact of high energy prices, it was not strong enough to discourage the Federal Reserve from its ultra-easy monetary policies. Policymakers however are debating whether they should start considering withdrawing some of their massive economic stimulus.

The private sector accounted for all the new jobs in March, adding 230,000 positions after February's 240,000 increase. Government employment fell 14,000, declining for a fifth straight month as local governments let go 15,000 workers.

The jobless rate, which is derived from a survey of households, has dropped 1.0 percentage point since November, mostly reflecting employment gains rather than a rise in the number of discouraged workers.

The US economy has recovered a fraction of the more than 8 million jobs lost in the recession. Economists say job growth of between 250,000 and 300,000 a month is needed to have a sizable impact on the pool of 13.5 million unemployed Americans.

Employment in March was concentrated in the private services sector, which added 199,000 jobs. Payrolls in the goods-producing industries rose 31,000, but manufacturing employment growth slowed to 17,000 from 32,000 in February.

The construction industry dipped 1,000 after rising 37,000 in February. The employment report also showed the average work week steady at 34.3 hours and average hourly earnings flat.