WASHINGTON — Employers added a robust 216,000 jobs in March as the unemployment rate dipped to 8.8 percent, the government said Friday in a better-than-expected report that showed the U.S. economic recovery is overcoming the headwinds from rising food and fuel prices.
"The numbers were solid, indicating that business confidence is improving to the point where hiring is beginning to step up," said Chris Varvares, president of forecaster Macroeconomic Advisers. "Numbers like this will generate income, increase confidence for consumers, and are the kinds of numbers we need to see on an ongoing basis to have the self-sustaining recovery and expansion that is in our forecast."
In the details of the Labor Department report, there was not much to love but plenty to like. The improvement in the unemployment rate was attributed to the 291,000 additional workers who described themselves as having a job, rather than people who have given up their job searches out of frustration.
A broader measure of unemployment — which also captures discouraged people who have given up looking for work and those who are working part time but want a full-time job — fell to 15.7 percent from 15.9 percent. The length of the average workweek rose to 33.6 hours, from 33.5, allowing those who already were working to take home more pay (though average hourly earnings dropped).
The gains were broad-based. Job growth was strongest in professional and business services, a category that includes white-collar professionals such as accountants, as well as those working for temporary employment services. That sector added 78,000 positions. Other major job creators were health care (which added 45,500 jobs); leisure and hospitality (37,000 jobs); retail (18,000 jobs); and manufacturing (17,000 jobs).
The only sector to shed large numbers of jobs was government, driven entirely by localities. Local governments cut 15,000 positions in March, reflecting their ongoing budget woes.
Temporary employment, usually a harbinger of future hiring, also was up by 28,800 jobs. Even if March numbers are repeated in the months ahead, it will take a long time to erase the 8 million job losses suffered during the recession of 2007-2009, the worst since the 1930s. But March suggests the recovery is taking root.
The benchmark S&P 500 gained 5.4 percent in the first three months of 2011, the Dow Jones Industrial Average was up 6.7 percent, its best quarter since 1999, and the tech-heavy Nasdaq composite rose 4.8 percent.
The White House welcomed the March employment numbers.
"The full percentage point drop in the unemployment rate over the past four months is the largest such decline since 1984, and, importantly, it has been driven primarily by increased employment, rather than people leaving the labor force," Austan Goolsbee, head of the White House Council of Economic Advisers, said in a statement. Still, he said, there will be "bumps in the road ahead."
Economists will be closely watching for signs of how oil prices anchored above $100 a barrel affect consumers, who account for two-thirds of U.S. economic activity. Several measures of consumer confidence soured sharply in the latter half of March as oil and gasoline prices soared.
"Higher energy and other commodity prices are the most serious threat to optimism regarding the job market and broader economy. Oil prices much above current prices for more than a few weeks will do serious damage," warned Mark Zandi, chief economist for forecaster Moody's Analytics.
Higher gas prices are like a tax on consumption. Shoppers may cut back on their purchases of other goods if pump prices remain high. The AAA Motor Club said the nationwide average price for a gallon of unleaded gas stood at $3.61, up from $3.38 a month ago and $2.80 a year ago Friday.
While Friday's jobs report was encouraging, plenty of unpleasant signs remain.
"The number of long-term unemployed remained high at 6.1 million, 45.5 percent of total unemployment," Keith Hall, Bureau of Labor Statistics commissioner, said in congressional testimony Friday. "Over the month, the number of individuals … working part time although they would have preferred full-time work was 8.4 million, down from 9 million a year earlier."
And the labor force has shrunk steadily since the beginning of the recession, to a point that just 64.2 percent of adults are either in the work force or looking for a job. That is the lowest labor participation rate in a quarter-century.
To some economists, the stubbornly high rate of long-term unemployed points to a serious change in economic reality.
"With a sizable portion of the potential workforce being separated from employment for long periods of time, the risk is that their skills will deteriorate and thus that they will have a much more difficult time reacquiring jobs," a Bank of America Merrill Lynch report said.
Information from McClatchey Newspapers, the Washington Post and the Associated Press was used in this report.