US jobless rate falls to 8.8%, two-year low

Non-farm payrolls rose 216,000 last month, the largest increase since May, the Labor Department said on Friday.

The strong job gains come amid indications the economy suffered a minor setback early in the year as bad weather and rising energy prices dampened activity.

“They are very consistent with the view that the recovery is gaining some momentum. So the economy continues to recover, it's very good news,” said Hugh Johnson, chief investment officer at Hugh Johnson Advisors in Albany, New York.

U.S. stock index futures rose, while government debt prices extended losses. The U.S. dollar climbed to a more than three-month high against the yen.

While the data indicated sufficient underlying strength in the economy to cushion it against the impact of high energy prices, it was likely not strong enough to discourage the Federal Reserve from its ultra-easy monetary policies.

Policymakers at the U.S. central bank are, however, debating whether they should start considering withdrawing some of their massive economic stimulus.

The private sector accounted for all the new jobs in March, adding 230,000 positions after February's 240,000 increase. Government employment fell 14,000, declining for a fifth straight month as local governments let go 15,000 workers.

The report showed January and February employment figures were revised to show 7,000 more jobs than previously reported.

Although rising energy prices — boosted by unrest in the Middle East and North Africa — are eroding consumer confidence, economists do not expect businesses to put the brakes on hiring just yet.

“Employment gains have been modest in recent months, so in that sense I think businesses that were initially very wary of taking on permanent full-time employees are feeling more confident now than was case some months ago,” said Richard DeKaser, an economist at Parthenon Group in Boston.

“As a result they are more willing to make those kinds of long-term commitments,” DeKaser said before the release of the report.

Unemployment Rate Dips

The strengthening labor market tenor was also underscored by the unemployment rate, which dipped to 8.8 percent, the lowest since March 2009, from 8.9 percent in February. The drop came even as more people came into labor force.

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