The US unemployment rate fell to a latest two-year low in March of 8.8%, from 8.9% in February. It was the fourth monthly fall in a row. The unemployment rate has fallen by a percentage point during the last four months. Employers created 216,000 jobs in March, the US Department of Labor said, higher than market expectations. Other economic data showed a slight dip in development in March, although the report was seen as largely positive.
The Institute for Supply Management’s (ISM) index of national factory activity dipped to 61.2 last month from 61.4 in February. This February’s rate was the premier since May 2004. Any reading above 50 indicates growth. US and European stock markets were boosted by the economic news. London, Paris and Frankfurt all closed with gains of more than 1.5%, while the Dow was up 1% by late afternoon.
According to a financial report, most of the new jobs were created in the private sector, in small businesses, shops and health care, as well as in education and several professional and financial services. Analyst says for future of economy that the recovery is continuing. The new private sector jobs offset job losses in the public sector, mainly resulting from cuts by local government.
If new small businesses keep on creating jobs at this pace, as many economists expect; there will be a further 2.5 million new jobs in the US by the end of the year. This sheer decline in the jobless rate and solid growth of new small businesses is an encouraging sign for US economy.
That will do little, however, to ease extensive concerns that the economic recovery in the US is failing to create enough jobs to make up for the 7.5 million lost during the recession. Analysts were also worried about the possible impact of rising oil and other commodity and energy prices. On the other hand, some analyst pointed to slow wage growth, which could offset the impact of higher energy and commodity prices. Just this week, the US Department of Commerce unexpectedly cut its estimate of fourth-quarter growth to an annualized rate of 2.8%, from 3.2% previously. Bottom line is new small businesses are bringing working capital , new jobs and new avenues to expand.