Jobless Rate Falls For a 2nd Month

Gas prices may be up and housing prices may be down, but the U.S. economy is still putting people to work and even adding a little padding to their paychecks.

New data from the Labor Department show the jobless rate ticked down slightly in March, to 4.4 percent. Businesses and government created 180,000 new jobs -- far more than many economists had expected -- as good weather helped to fuel a rebound in construction hiring.

Retailers, restaurants, schools and hospitals also added jobs at a brisk pace, according to the report luring people back into the job market and more than offsetting job losses in factories, telecommunications and leasing. Meanwhile, average hourly wages for non-supervisory workers jumped to $17.22, up from $16.55 one year ago, a solid 4 percent increase.

"There's now very strong growth in the labor force, as strong as it's been since the turn of the decade," said Mark Zandi, chief economist at Moody's Economy.com. "Wages are rising and people are starting to recognize that this is the best time to be looking for a job since 2000."

The drop in unemployment was the second consecutive monthly decline, pushing the jobless rate down to a level touched briefly last fall but not seen previously since 2001. Combined with rising wages, economists said the new employment numbers offer evidence that the job market remains surprisingly sturdy despite a slump in the housing market and continued weakness in the manufacturing sector, which shed another 16,000 jobs last month.

The downturn in housing and the auto industry had sparked concern that the nation's economic expansion was slowing and prompted calls for the Federal Reserve to lower interest rates to spur growth. The Fed has so far rejected those calls -- it held interest rates steady at its most recent meeting -- and maintained its focus on holding down inflation.

Yesterday's job report makes a rate cut even less likely, economists said, at least in the immediate future.

"The Fed isn't doing anything in the short term," said Jan Hatzius, chief U.S. economist for Goldman Sachs, which shifted its forecast for a rate cut from June to September after seeing yesterday's numbers.

The drop in unemployment is just one sign that the demand for labor remains strong. Unlike in February, when the jobless rate fell in part because 190,000 people stopped looking for work, the labor force actually grew by 195,000 people in March, according to the report. Estimates of new jobs added in January and February also were revised upward by 16,000 each month, for final totals of 162,0000 and 113,000.

Meanwhile, economists said the rise in wages should help keep consumer spending on track, a critical element that drives about two-thirds of economic activity.

"People are doing pretty well this year," said David A. Wyss, chief economist at Standard & Poor's. "They're getting more money in their pocket."

Despite the good news, economists predict that the economy will slow later this year, as manufacturing continues to weaken and the housing slump takes its toll on jobs. Zandi pointed to a loss of 12,300 jobs in employment services last month, including temporary workers, who tend to be among the first let go when business gets tough.

So far, however, commercial construction is absorbing job losses on the residential side, fueling hope that "the problems in housing will stay in housing this time" instead of "leaking out" to damage the larger economy, said Edward E. Leamer, director of the UCLA Anderson Forecast.

Whatever happens down the road, yesterday's good news will give Treasury Secretary Henry M. Paulson Jr. and Fed Chairman Ben S. Bernanke bragging rights when global finance ministers and bankers gather in Washington next week for the annual meeting of the World Bank and the International Monetary Fund.

"The unemployment rate is low, job creation is strong and steady and wages are rising," Phillip L. Swagel, assistant Treasury secretary for economic policy, told reporters yesterday. "Secretary Paulson . . . sees the U.S. economy transitioning to a sustainable rate of growth."