The March employment report, although not spectacular, marked a turning point. The U.S. economy generated 162,000 more positions for workers last month, the most we have seen in three years.
Hiring for the Census accounted for 48,000 new jobs last month. This was less than expected and suggests that Census hiring will be an even larger contributor to employment in both April and May.
Most importantly, private sector firms added 123,000 employees to their payrolls last month. This indicates that we are approaching the point where the “growth baton” can be successfully passed from the public to the private sector.
Two of the economy’s most beleaguered segments—construction and manufacturing—added jobs in March. Construction employment experienced its first gain since June 2007, although much of the gain may have reflected a recovery from weather losses earlier in the year. Manufacturing, a part of our economy where some despaired would never see a return of jobs, added positions for the third month in a row.
Companies are moving to the fourth and most significant chapter of the jobs story. The first entailed sharp cutbacks in work forces as the recession ravaged sales and profits. The second saw companies relying on reduced workforces and sharp productivity gains. The third chapter found companies extending work weeks, raising the amount of overtime, and calling on staffing firms to supply temporary workers. We are now transitioning to the fourth chapter, where companies have gained enough confidence in the recovery to hire permanent workers.
This stage is especially important as job growth is essential to supporting a sustained improvement in housing and consumer spending. Breaking the negative feedback loop that saw declining jobs drive down home purchases and retail sales, which then led to further job cuts, was critical. Moving to a virtuous cycle that will involve a positive feedback loop between employment and spending will give the recovery vital momentum.
The U.S. job market is far from healthy. Fifteen million Americans are out of work and the unemployment rate is near double-digits at 9.7%. It may take until 2013 before we regain the previous high in employment.
Yet, it appears that the job market has turned the corner. The U.S. economic recovery is real.