US job market booming, over 200,000 new jobs in March

Washington: US payrolls rose by more than 200,000 for the fourth straight month in March, suggesting the economy is steadily healing and needs no extra monetary policy support from the Federal Reserve for now.

That would mark the longest stretch of increases of more than 200,000 per month in non-farm payrolls since 1999. The unemployment rate is seen holding steady though at a three-year low of 8.3 percent for a third month in a row.

[caption id=“attachment_268133” align=“alignleft” width=“380” caption=“The unemployment rate is seen holding steady though at a three-year low of 8.3 percent for a third month in a row.”]  [/caption]

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Employers likely added 203,000 new jobs in March, according to a Reuters consensus survey of economists, down a little from 227,000 in February when mild winter weather may have provided a lift to seasonal hiring.

The US Labor Department will release the March employment report on Friday at 8:30 am.“The economy is close to a self-sustaining expansion,” said Gus Faucher, senior economist at PNC Financial Services in Pittsburgh.

“It will take a few more months of good employment numbers to confirm that the labor market is finally on its way to persistently better job opportunities.”

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A fourth successive month of healthy employment gains could help President Barack Obama who faces re-election in November.

Even though job growth has been more than 200,000 per month since December and the unemployment rate fallen from 9.1 percent in August, it remains a little above the level when Obama took office.

A big rise in payrolls could push the jobless rate up even further though, or at least keep the rate above 8.0 percent through the rest of this year, by luring unemployed Americans who had given up the search for work back into the labor force.

The economy has lost about 5.3 million jobs since the start of the 2007-09 recession. At the recent pace of growth, those jobs will not be recouped before early 2014.

The painfully slow recovery in the labor market is a concern for Federal Reserver Chairman Ben Bernanke who is keeping open the option of further monetary policy support for the economy if the unemploymnt rate remains stubbornly high.

But the minutes of the Fed’s March policy meeting released this week showed policymakers seeing a broadening of the economic recovery, leaving them slightly less inclined to launch a third round of bond purchases, known as quantitative easing, to spur growth.

“The key challenge will be determining whether the economic recovery has generated sufficient momentum to obviate the need for further monetary policy support,” said Millan Mulraine, senior macro strategist at TD Securities in New York.

“With the economy continuing to build on the gains of the last quarter the risks of more policy accommodation from the Fed has diminished.”

The private sector is expected to have added 218,000 new positions in March, while government layoffs likely continued for a seventh straight month though at a slower pace.

Manufacturing likely enjoyed another month of strong job gains, helped by carmakers trying to meet pent-up demand for motor vehicles. Factory jobs increased by 83,000 in the first two months of the year.

Construction hiring surprised by falling 13,000 in February despite warm weathter and could see a rebound in March. Further gains in mining are likely as exploration expands for inland gas.

In the huge service sectors, gains are expected in healthcare, professional and business services, as well as temporary help categories, in line with recent trends.

The sturdy gains in manufacturing and professional and business services employment should help to lift average hourly earning by 0.2 percent and partially counter the notion that most the new jobs being created pay low wages. The workweek is seen steady at a 3-1/2 year high of 34.5 hours for a fourth straight month.

While the unemployment rate has dropped significantly, long-term unemployment remains stubbornly high and 23.5 million Americans are either out of work or underemployed.

As long as gross domestic product growth remains sluggish employment growth is likely to remain moderate, keeping alive the prospect for further Fed stimulative measures. GDP growth is seen around 2.0 percent annualized in the first quarter 2012 down from 3.0 percent rate in the October-December period.

“The potential is still there for more quantitative easing, but not in April,” said Bob Baur, chief global economist at Principal Global Investors in Des Moines, Iowa.

“If the Fed sees growth slow and we see a down tick in the jobs numbers, then I don’t think its unreasonable to expect the Fed might do its quantitative easing in June.”

Reuters