Jobless rate drops to 8.8%, 216K jobs added

More good news on the job front came today in the latest announcement of data from the Bureau of Labor Statistics.  The economy added 216,000 jobs in March and pushed the jobless rate down slightly to 8.8%, from February’s 8.9%:

Nonfarm payroll employment increased by 216,000 in March, and the unemployment rate was little changed at 8.8 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, leisure and hospitality, and mining. Employment in manufacturing continued to trend up.

The number of unemployed persons (13.5 million) and the unemployment rate (8.8 percent) changed little in March. The labor force also was little changed over the month. Since November 2010, the jobless rate has declined by 1.0 percentage point. (See table A-1.)

Among the major worker groups, the unemployment rates for adult men (8.6 percent), adult women (7.7 percent), teenagers (24.5 percent), whites (7.9 percent), blacks (15.5 percent), and Hispanics (11.3 percent) showed little change in March. The jobless rate for Asians was 7.1 percent, not seasonally adjusted. (See tables A-1, A-2, and A-3.)

The number of job losers and persons who completed temporary jobs, at 8.2 million, was little changed in March but has fallen by 1.3 million since November 2010. The number of long-term unemployed (those jobless for 27 weeks or more) was 6.1 million in March; their share of the unemployed increased from 43.9 to 45.5 percent over the month. (See tables A-11 and A-12.)

Effectively, the addition of jobs is benefiting those who have been out of work for a shorter period of time, which makes sense.  The rate of growth is about double that needed to maintain equilibrium, and this marks the first time since the crash that we’ve put together two 200K+ months in a row.

As good as that news is, it will take a very, very long time to create enough jobs to restore the pre-crash levels of employment.  The civilian participation rate has not changed from its previous 64.2%, which means that those who have stopped looking for work are still sitting on the sidelines.  A year ago, that number was 64.9%.  At this rate, it will take more than five years to add six million jobs back into the economy.  However, one other sign of good news was a slight drop in the number of people not in the work force (a drop of 11,000), which was the first time in more than two years that number has not risen.

The top-line number is still deceptive in that it compares apples to oranges on unemployment, thanks to the depressed participation rate, but it’s good news to see job additions rise above 200,000 for the second straight month.

Update: Reuters reports that the private sector gained 230,000, but warns that conditions could change:

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.

Although rising energy prices — boosted by unrest in the Middle East and North Africa — are eroding consumer confidence, economists do not expect businesses to put the brakes on hiring just yet.

“Employment gains have been modest in recent months, so in that sense I think businesses that were initially very wary of taking on permanent full-time employees are feeling more confident now than was case some months ago,” said Richard DeKaser, an economist at Parthenon Group in Boston.

Energy price hikes could put a big damper on any more expansion, but the prices were going up in February and didn’t appear to dent hiring in March.  It’s also true that businesses have squeezed just about all they can out of productivity and have to hire to add capability, if indeed that’s what they plan.  But also keep in mind that last quarter’s 3.1% GDP rate won’t translate into a job creation rate much higher than we’re seeing now, either.  If the economy is to sustain these numbers, growth has to go past the 4% GDP rate and above and stay there consistently for a long time.

Update II: I didn’t explain the long-term unemployed picture very carefully.  While we’re adding jobs to the economy in a real sense (in other words, above the 100K threshold to keep pace with population growth), those benefiting from it are the recently unemployed.  That’s why the number of long-term unemployed (27 weeks or more) went up around 110,000 in March and their share of the overall unemployed increased more dramatically from 43.9% to 45.5%.