Economy Adds 308,000 Jobs in March

WASHINGTON – U.S. employment rose last month at the fastest pace in nearly four years as hiring jumped in a wide array of industries, the government said on Friday in a surprisingly strong report that stunned financial markets.

The report, which showed the labor market finally making a decisive break out of a long slump, buoyed the re-election hopes of President Bush, who has been blasted by Democrats over the jobs lost on his watch.

Markets judged it brought nearer the day the Federal Reserve (search) would raise overnight interest rates from 1958 lows, but analysts said the central bank would have to see a string of good jobs gains before pushing rates up.

The Labor Department (search) said non-farm payrolls climbed a steep 308,000 in March, the biggest gain since April 2000 and well above the 103,000 rise expected on Wall Street.

The unemployment rate, which is determined by a survey separate from the jobs tally, ticked up to 5.7 percent from the two-year low of 5.6 percent in January and February. But economists largely dismissed the rise as insignificant.

"All in all, this is a very strong report," said Kurt Karl, head of research at Swiss Re in New York. "It bodes well for the economy going forward."

The big jump in payrolls stood in sharp relief to the average gains of around 75,000 new jobs in the prior six months. It trimmed the number of jobs lost since January 2001 to a still-hefty 1.8 million.

Administration officials said the report showed the president's tax-cut policies were helping the economy. But Democrats said the data did little to erase a record of economic mismanagement.

U.S. bond prices plunged — the benchmark 10-year issue posted its biggest move in over five years before retracing — as investors were caught flat-footed by the payrolls strength.

The dollar shot higher and stock prices rose. The blue chip Dow Jones industrial average closed up 97 points at 10,470.

Economists said the report meant the Fed could hike overnight interest rates, which have been at a historically low 1 percent since June, sooner than had been expected.

"The Fed is still likely to wait and see if we see similar strong job growth in future months," said Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis. "But if we've turned the corner, the Fed may not wait much longer."

Harvey Rosenblum, research director at the Dallas Federal Reserve Bank, told Reuters late June would be the very earliest that enough evidence would be in hand to assess whether rates should move higher. "There is room for further disappointment between this number and the end of June," he added.

A combined upward revision of 87,000 jobs to January and February payrolls contributed to the report's positive tone.

However, the workweek drew shorter, pulling down a measure of overall work effort. Along with the slight tick up in the jobless rate, it tempered an otherwise buoyant message.

Some economists said businesses might prefer to make employees work a bit longer before adding new workers, which could weigh on job growth ahead.

But for the Bush administration, the report was good news.

"I think this is the final confirmation of how strong this economy is and how it continues to get stronger," Commerce Secretary Don Evans (search) said in a radio interview. "To see these strong numbers come out this month is very encouraging."

Democratic Sen. John Kerry (search), who is challenging Bush for the White House, said the longer-term trend of job losses argued for new economic policies.

"After three years of punishing job losses, the one-month job creation announced today is welcome news for America's workers," Kerry said in a statement. "But for too many families, living through the worst job recovery since the Great Depression has been, and continues to be, far too painful."

The department said payrolls got a 10,000-to-20,000 boost as employees returned to work following a dispute at grocery stores in California that had idled 72,000 workers. The impact was muted because many of the returning employees displaced temporary hires.

The return of the striking and locked-out workers was reflected in a 47,000-job increase in the retail sector.

In addition, construction payrolls shot up by 71,000 in a bounce-back from a 21,000 decline in February attributed to bad weather.

Although some of the strength may prove fleeting, hiring was widespread across industries.

While a long-hoped-for rise in manufacturing employment did not materialize, the department said factory payrolls were unchanged last month, finally breaking a string of 43 consecutive monthly declines.

The big payrolls jump offered hope the U.S. economy was finally moving out of an unusually long spell in which employment was either falling or rising too slowly to keep up with the usual growth in the labor force.

While the overall economy climbed out of recession in November 2001, employment did not. The number of jobs still stands 323,000 below its level at the end of the recession.