Businesses hired robustly and joblessness fell in March, according to government data released today, capping a quarter of healthy expansion by the U.S. economy.
Employers added 211,000 jobs to their payrolls, the Labor Department reported, as the unemployment rate dipped to 4.7 percent, from 4.8 percent in February. The data comes on the heels of similarly strong jobs reports in January and February, making for the strongest first-quarter job growth in six years.
The stock market fell as investors concluded that the strong employment situation makes it more likely the Federal Reserve will keep raising interest rates into the summer.
Combined with other favorable data, the strong employment numbers suggest that businesses are expanding at a healthier pace than they have for most of the sometimes halting expansion of the past four years. Many economists now believe that gross domestic product, a measure of all the goods and services produced, grew 5 percent or more in the first quarter, compared with 1.7 percent in the fourth quarter of 2005.
"We're adding a lot of jobs," said David Wyss, chief economist of Standard & Poor's. "Let's face it, 211,000 jobs at this stage of the employment cycle is pretty darn good."
The strong job growth partly reflects people displaced by Gulf Coast hurricanes last fall being rehired, an impact likely to dissipate as the year progresses. And many economists think that growth will slow later this year, as the impact of Federal Reserve rate hikes takes hold and the housing market slows.
And today's numbers were not all rosy. The number of manufacturing jobs declined by 5,000, continuing a long slide. Average weekly earnings of nonsupervisory workers increased by an unimpressive 0.2 percent -- which may be bad for workers, but which stock and bond markets interpreted as good news because it suggests wage inflation is restrained.
There have been some other hints lately that the economy might not be as universally strong as headline numbers would imply. Sales rose only 1.9 percent in March, compared with a year earlier, at major chain retailers open at least a year. And consumer spending rose only 0.1 percent in February and personal income by 0.3 percent, both sharp drops in the pace of growth from January. Perhaps most significantly, the housing sector is slowing based on many measures, including the number of new housing starts that fell 7.9 percent in February.
In light of the new job numbers, though, economists played down those signs of weakness. Sluggish retail sales could be attributable to a late Easter, lower personal income may be revised away as more data become available and housing activity, so far, has declined to levels that are off last year's all-time highs but still strong by historical measures.
"By historical comparison, there's not an economist on the street that can call housing weak right now," said Richard Yamarone, chief economist at Argus Research. "If this is the soft patch, it's pretty darn good for a soft patch," although he said he does expect housing to soften further as the year progresses.
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