US employers added a stronger than expected 180,000 new jobs in March while unemployment rate fell to a five-month low, implying the economy remains durable despite a slowdown in housing.
Yesterday's intently awaited report on hiring from the US Labour Department also showed job growth was stronger in both January and February than previously thought.
The March unemployment rate dropped to 4.4 per cent from 4.5 per cent in February, its lowest level since a matching 4.4 per cent in October.
The last time the unemployment rate was lower was nearly six years ago, in May 2001, when it touched 4.3 per cent. Analysts said the job figures implied the economy was on its way toward a successful "soft landing" in which growth slows enough to contain inflation but does not sink into a punishing downturn.
"The healthy data again hints at limited housing contagion spreading through the economy," said Alan Ruskin, chief international strategist for RBS Greenwich Capital in Greenwich, Connecticut.
He added that "even allowing for monthly noise [it] is likely to play further against expectations of Fed [Federal Reserve] easing in the late summer and beyond."
There were some soft spots, with the manufacturing sector shedding another 16,000 jobs in March and information-processing industries dropping 5,000. But interest rate futures showed the market perceived less chance of an interest rate cut in the near future, with the implied probability of a cut in June falling to 12 per cent from 20 per cent before the jobs data was released.
The dollar strengthened on the indication of job market strength that analysts said bodes well for sustaining consumers' incomes and spending, even if the overall pace of economic activity is easing.
"This report is consistent with the idea that the US job market remains solid and that economic growth by no means is going to drift down to recessionary levels," said Stuart Hoffman, chief economist for PNC Financial Services in Pittsburgh.
"We know that at this point overall economic growth is slower but that has not taken a bite out of employers' wish to hire, which augurs well for consumer spending," Mr Hoffman added.
- (Reuters)
