Employers in the U.S. boosted payrolls in March and the unemployment rate held at 6.7 percent even as more Americans entered the labor force, showing steady progress that will probably prompt Federal Reserve policy makers to continue reducing stimulus while keeping interest rates low.
Payrolls rose 192,000 after a 197,000 gain in February that was larger than first estimated, the Labor Department reported today in Washington. The median forecast in a Bloomberg survey of economists projected a 200,000 gain. Private employment, which excludes government jobs, surpassed the pre-recession peak for the first time.
Employment in January and February was revised higher, showing the effect on the labor market from inclement winter weather was less severe than previously thought. The gain puts payroll growth in step with the average over the past two years and shows companies are optimistic about the outlook for demand.
“This is a very good report,” said Nariman Behravesh, chief economist at IHS Inc. in Lexington, Massachusetts, and the top payrolls forecaster in the last two years, according to data compiled by Bloomberg. “It looks like we’re back on track.”
Revisions to prior reports added a total of 37,000 jobs to payrolls in the previous two months. The report also showed an increase in hours worked and little change in hourly earnings from February.
Forecasts for March payrolls ranged from increases of 150,000 to 275,000 after a previously reported 175,000 gain a month earlier, according to the Bloomberg survey of 90 economists. Last year, the U.S. added 194,000 jobs each month on average after 186,000 in 2012.
Stocks pared gains, after benchmark indexes rose to all-time highs after the report. The Standard & Poor’s 500 Index advanced 0.1 percent to 1,890.19 at 9:55 a.m. in New York, trimming an earlier advance of 0.5 percent.
The agency’s survey of households showed about a half million people entered the labor force, and at the same time, almost as many found work. The figures also showed an increase in the number of people employed part-time. The so-called participation rate, which indicates the share of working-age people in the labor force, increased to 63.2 percent from 63 percent a month earlier.
The number of people employed as a share of the working-age population increased to 58.9 percent, the highest since August 2009.
Private payrolls, which don’t include government agencies, increased 192,000 in March, the most in four months, after a 188,000 gain. With last month’s increase, total private payrolls reached 116.1 million, surpassing the pre-recession peak.
Accounting firm Ernst & Young LLP plans to increase hiring this year by almost 22 percent, said Dan Black, director of recruiting for the Americas. The New York-based company will recruit 12,700 employees. Of those, 7,200 will be recent college graduates.
“Not only are we back to pre-recession level, this is the largest number of hires we’ve ever made in the United States,” Black said. “When you see growth like that, for me, and for us, that’s an indicator of something positive. We’re seeing a lot of demand here.”
The U.S. has recovered all but 437,000 of the 8.7 million jobs, including those at government agencies, lost as a result of the last recession.
Factories reduced payrolls by 1,000 workers after adding 19,000 in February, today’s report showed. Construction companies boosted employment by 19,000 workers and retail payrolls rebounded 21,300.
The number of temporary workers jumped 28,500.
Recent data have pointed to a thaw in the economy and the labor market as temperatures began to warm. A report yesterday showed service industries, which account for almost 90 percent of the economy, improved and more companies said they were adding to headcount.
The Institute for Supply Management’s non-manufacturing index rose to 53.1 in March from a four-year low of 51.6 a month earlier. Readings greater than 50 signal expansion. The Tempe, Arizona-based ISM said its measure of employment increased by the most on record. The group’s factory index also accelerated, driven by gains in production and orders.
Ford Motor Co., Chrysler LLC and General Motors Co. reported March sales that beat analysts’ estimates as consumers, whose confidence is at a six-year high, returned to auto showrooms.
Cars and light trucks sold at a 16.33 million annualized rate in March, the strongest since May 2007, according to Ward’s Automotive Group.
Such demand helps explain why automakers are planning on increasing headcounts. Bayerische Motoren Werke AG, last month said it would expand its factory in Spartanburg, South Carolina, creating 800 new jobs by 2016 and boosting production by 50 percent, to 450,000 cars a year. The $1 billion investment by the Munich-based automaker would make the plant one of the largest in the U.S.
“This corresponds to more than 30,000 jobs and $1.8 billion in labor income for South Carolina that would not exist otherwise,” Chief Executive Officer Norbert Reithofer said in a March 28 speech.
Fed Chair Janet Yellen highlighted inconsistencies in labor-market data in a speech this week, saying that the recovery “still feels like a recession to many Americans.”
“The numbers of people who have been trying to find work for more than six months or more than a year are much higher today than they ever were since records began decades ago,” Yellen said at a conference in Chicago. “While there has been steady progress, there is also no doubt that the economy and the job market are not back to normal health.”
Faster employment growth would help stoke wage gains and embolden households, whose spending accounts for almost 70 percent of the economy.