With a 0.1% reduction in the unemployment rate, the US economy continued a trend of modest job growth in March, according to statistics [.pdf] released today from the Labor Department. The private sector added 230,000 jobs, while the public sector cut 14,000 jobs, resulting with a growth of 216,000 jobs in March. This growth not only brought the unemployment rate to 8.8%, which is down from 8.9% in February, but job growth in March also marked the sixth consecutive month with an overall increase in the amount of jobs.
These results are slightly better than February, when the US economy added 194,000 jobs and the unemployment rate also declined 0.1%. Among the eighteen major industries in the private sector, fifteen of these industries recorded job growth in March, with the greatest gains including:
- Professional and business services: 78,000 jobs.
- Health care and social assistance: 44,500 jobs.
- Leisure and hospitality: 37,000 jobs.
In contrast to six consecutive months of job growth in the private sector, the public sector has now recorded ten consecutive months of job cuts. Altogether, the public sector cut 777,000 jobs in the past ten months. Even though a majority of these cuts were temporary employees for the US Census, local governments face reduced budgets and have contributed to the negative trend in government employees.
Despite the consistent reduction in government employees, the recovery of domestic labor is attempting to accelerate, as the chart below shows. Overall job growth was greater in March than any month since May of 2010, when there was a surge of temporary employees for the US Census.
In addition to an improved unemployment rate, an upswing in domestic labor is also suggested from fewer individuals filing for unemployment benefits. During the week ending March 26th, the four-week rolling average for new unemployment claims totaled 394,250. This marks the eighth consecutive week with a four-week rolling average below 400,000. Prior to this eight week stretch, the rolling average for new employment claims had not been below 400,000 since July 2008.
Fewer individuals filing for unemployment claims indicates fewer layoffs, as well as fewer individuals eventually receiving unemployment benefits. As of March 12th, there were 8.7 million individuals receiving unemployment benefits. At the same point in 2010, there were 11.5 million individuals receiving unemployment benefits, which results with a 30% reduction in the past year. Clearly, this annual reduction suggests an improvement in the domestic labor market.
However, keep in mind that those individuals no longer receiving unemployment benefits are not necessarily employed. Many individuals who became unemployed during the great recession have maxed out their eligibility of 99 weeks of unemployment benefits, as discussed in the past. Additionally, if all these individuals who no longer receive benefits were now employed, overall job growth would have been higher.
From September 2008 to December 2009, overall employment declined 6.6 million jobs. From January 2010 to March 2011, overall employment has only grown 1.4 million jobs. This discrepancy between how many individuals became unemployed and how many have been hired shows how domestic labor is still far from a complete recovery.
Moreover, the unemployment rate remains at a historically high level of 8.8% and whether the US economy can reach 8% by 2012 is uncertain. Rising consumer prices, such as energy and food, potentially threaten sustained job growth in 2011. The average price for a gallon of gas is currently $3.65, which is the highest point throughout President Obama’s tenure.
Even though the American people are eager for a significant acceleration in job growth, rising commodity prices will likely keep job growth modest at best. Modest growth is not necessarily unwelcome, but the historically sluggish position of the labor market calls for a quicker recovery.