Though the light at the end of the metaphoric tunnel is still but a candle flickering in the wind, March 2010 brought with it an improved job market number. While we're far from out of the woods in terms of a strong economy yet again and a decreasing unemployment rate, small improvements like this, if they continue, will add up in the end. Slow and steady wins the race, right? The tortoise thought so, and we saw how that panned out for him.
The job market is showing signs of life, though its slow recovery suggests unemployment will remain high for years to come.
Employers added 162,000 jobs in March, the biggest monthly gain in three years, with one-third of the growth coming from the government's hiring of 48,000 temporary workers for the 2010 Census. Despite those gains, the jobless rate held steady at 9.7% as new workers entered the job market and people who had previously quit the labor force returned.
The average length of unemployment rose last month to the highest point since record keeping began in 1948: more than 31 weeks. The number of workers out of work for six months or more rose sharply.
The latest report, which marks the third month since November in which payrolls increased, indicates the labor market is pulling out of a deep downturn that slashed more than eight million jobs since the recession hit in late 2007.
"It confirms that the economy has turned an important corner," says J.P. Morgan Chase & Co. chief economist Bruce Kasman. "It's been growing for a while, but I think what we're seeing is that this growth is now broadening out to include jobs."
The stock market was closed Friday for a holiday, but the jobs report sent stock futures climbing during a morning session. As investors anticipate a stronger economy—and look ahead to an eventual Federal Reserve rate hike—they pushed down Treasury debt prices, sending the yield on 10-year Treasury notes, the benchmark for corporate and consumer borrowing, to 3.94%, the highest since June.
Among those who have landed jobs lately is New York Web developer Philip John Basile, although, as with many other new hires, it is a temporary six-month assignment with the Leukemia & Lymphoma Society. He had been searching in earnest for three months, he says. "I'm still looking for a permanent job, but this is a good middle ground," he says.
Many employers are reluctant to hire until they see stronger evidence of an economic recovery. Private-sector payrolls increased by 123,000 in March, but much of that boost was a bounce back from employment depressed in February by snowstorms. The government said overall payrolls increased by an average of 54,000 a month over the last three months.
The economic recovery so far remains heavily reliant on government support, which is visible in the jobs numbers. Hiring for the decennial census is expected to add hundreds of thousands of temporary jobs in the coming months. Other forms of government intervention also remain crucial. The housing sector's boost is being driven in part by tax breaks and extensive government support for the mortgage market. And last year's $787 billion stimulus is temporarily preventing even deeper job losses in fields from construction to education.
"We don't expect it to get worse, but we're not seeing a rebound yet," says Donald Stone Jr., chief executive of Dewberry & Davis, a Fairfax, Va.-based engineering firm. The closely held company is hiring 30 right now, but doesn't expect employment to return to its peak anytime soon, Mr. Stone says. Dewberry employed 1,800 in 2009, about 10% below its prerecession high.
While stimulus projects have bolstered its business with the federal government, state and local governments still seem strapped for cash, Mr. Stone says. Dewberry's private development work also has remained scarce. "Projects have been very sporadic and certainly not what I would call a rebound," he says.
Catholic Health Initiatives, a nonprofit national health-care provider based in Denver, is taking a wait-and-see approach to hiring. Over the last 18 months, the company laid off about 2,000, leaving its work force at 70,000, says chief operating officer Michael Rowan. With inpatient admissions down 3.5% this year, Mr. Rowan expects staffing to grow only 1%, and that will happen through acquisitions.
Health care was one of the few sectors adding jobs during the downturn. But in March, the gains were broad-based.
The retail sector added 14,900 jobs. Temporary employment—a positive indicator for the labor market, since many employers increase temp hiring as a prelude to adding permanent jobs—increased by 40,200. Construction added jobs for the first time since mid-2007, although the gains likely were the result of a bounce back from February's weather slowdown. Manufacturing added 17,000 jobs, the third straight month of gains.
Replacing the more than eight million jobs lost since the recession started likely will take much of the next decade. The economy needs to create at least 100,000 jobs a month just to keep the unemployment rate flat, due to population growth. Because of the downturn, millions of Americans quit searching for work or dropped out of the labor force. A broader measure of unemployment, which includes people who stopped looking for work and those settling for part-time jobs, rose to 16.9% in March.
The improving economy is certain to draw more job seekers back into the market, one factor likely to keep the unemployment rate from dropping quickly. The labor force—those working or looking for work—grew by 398,000 in March, the third straight monthly increase.
Federal Reserve officials expect the jobless rate to remain above 9% through this year and above 8% throughout 2011. The large pool of available labor is likely to constrain wage growth in the coming years. The report showed that average hourly earnings declined 0.1% during the month, although the average work week and total hours worked grew. For that reason, even with the latest turn toward job growth, the Fed isn't likely to raise interest rates until late this year at the earliest.