Job Growth Quickens, Unemployment Drops

April 6 (Bloomberg) -- American employers added more workers than forecast in March and the jobless rate matched a five-year low, giving the economy a spark as it struggles to overcome slumps in housing and manufacturing.
The 180,000 increase in employment, the most in three months, followed a 113,000 gain in February that was larger than previously estimated, the Labor Department reported today in Washington. The jobless rate fell to 4.4 percent, a level last seen in October, defying predictions it would climb.
Plentiful jobs and bigger paychecks are giving more people the means to spend, preventing the housing recession from spreading to the rest of the economy. The report takes some of the pressure off Federal Reserve Chairman Ben S. Bernanke to cut interest rates. Bonds tumbled and the dollar jumped.
``The expansion is going to keep rolling,'' said Bill Cheney, chief economist at John Hancock Financial Services Inc. in Boston. ``The Fed isn't going to move rates any time this year.''
Separately, the Commerce Department reported that sales at U.S. wholesalers outpaced inventories in February, which may lay the groundwork for a manufacturing rebound in coming months.
The 1.2 percent increase in sales followed a 0.9 percent decline a month earlier. Stockpiles of unsold goods rose 0.5 percent. Wholesalers make up about a quarter of all business inventories.
Builders, Retailers
Builders increased hiring as the cold weather experienced in February eased. Retailers also added to payrolls, while factories continued to lose jobs.
Economists projected payrolls would rise by 130,000 following a previously reported 97,000 February increase, according to the median of 75 forecasts in a Bloomberg News survey. They also anticipated an increase in the unemployment rate to 4.6 percent.
Revisions for the prior two months showed employers added 32,000 more jobs than earlier estimated.
Workers' average hourly earnings rose 6 cents, or 0.3 percent, after a 0.4 percent increase the previous month. Economists expected a 0.3 percent increase in hourly wages. Earnings were up 4 percent from March last year.
``This points to continued strong income growth for consumers and also suggests the somewhat softer GDP numbers we've seen have not generated any softness in the labor Market,'' said Dean Maki, chief U.S. economist at Barclays Capital in New York.
Hiring for Services
Service industries, which include banking, insurance, restaurants and retailers, gained 137,000 workers last month after a 180,000 gain in February. The increase was led by a 36,000 gain in retail employment that was the biggest since July 2005.
Builders added 56,000 jobs after shedding 61,000 the prior month. The snap back is probably due to the return of more seasonable temperatures after cold weather played a role in the February drop, the Labor Department said.
Manufacturers' payrolls fell 16,000 after dropping 11,000 a month earlier. Economists expected manufacturers to eliminate 12,000 positions. The manufacturing workweek rose to 41.1 hours and overtime increased to 4.3 hours from 4.2 hours.
Working Week
Average weekly hours worked by production workers increased to 33.9 from 33.8. Economists in the Bloomberg survey had forecast hours would rise to 33.8 from 33.7.
Average weekly earnings rose to $583.76 last month from $580.01 in February.
``We continue to see modest growth and stability in the labor market,'' Steve Pogorzelski president of Monster International Worldwide, said in an interview on April 4. ``Employers continue to report they're concerned about turnover, driven by opportunities to make more money'' in other jobs.
The report is in line with others in recent weeks that suggested the labor market was holding up.
ADP Employer Services said companies added 106,000 jobs last month after a 65,000 gain in February. The ADP data are based only on a count of private payrolls that exclude government workers.
A Conference Board survey released last week showed the share of Americans who said jobs are plentiful rose last month to the highest since August 2001. First-time claims for unemployment benefits also showed companies are holding on to workers.
Searching for Talent
``It's hard to find enough people to grow the way we want,'' said John Milligan, chief operating officer of Foster City, California-based Gilead Sciences Inc., the world's second- biggest seller of HIV drugs behind GlaxoSmithKline Plc, in an interview last month.
Other businesses are trying to trim costs by reducing staff. Milpitas, California-based Solectron Corp., the world's second-largest maker of electronics for other companies, said last week it may cut as many as 1,500 jobs as it consolidates facilities in North America and Europe.
Fed policy makers were counting on jobs and wages to keep consumers and the economy afloat.
``The continuing increases in employment, together with some pickup in real wages, have helped sustain consumer spending,'' Fed Chairman Bernanke said during Congressional testimony last week. ``Growth in consumer spending should continue to support the economic expansion in coming quarters.''
Bernanke also said interest-rate policy was still aimed at combating inflation, which central bankers considered a bigger risk to the economy. Still, ``uncertainties have risen, and therefore a little more flexibility might be desirable.''