US is boosted by a rising workforce

By LUCY FARNDON FOR THE DAILY MAIL
Updated:

 

American employers hired an extra 162,000 workers last month, the strongest growth in three years, in a further signal that the world's largest economy is getting back on its feet.

Non-farm payrolls, a crucial indicator of the US's economic health, rose for only the third time since the credit crisis hit in the autumn of 2007.

US and European markets were closed for the Good Friday bank holiday, but the news gave a boost to US stock futures, suggesting equities could be in for a further climb next week. Asian markets rallied to a 21-month high.

The 162,000 rise in payrolls was slightly lower than expected, with economists having pencilled in a 190,000 jump.

'We are beginning to turn the corner,' Barack Obama said in a speech last night.

However, the US President warned there was still a 'lot more work to do' despite the ' welcome' drop in unemployment.

America's financial woes are far from over. The unemployment rate held steady at 9.7%, still considerably higher than the 7.7% rate in the UK but below the eurozone's 10%.

But with 15m people out of work, more than 8m of whom lost their jobs during this recession, President Barack Obama is under pressure from a disillusioned-electorate. Interest rates are currently near zero in the US, but a run of strong employment numbers may force the Federal Reserve to raise borrowing levels in the months ahead.

Private employers hired more workers than expected in March, which suggests the US revival is not just being driven by government initiatives. There were improvements across the board, with growth in the manufacturing, construction and services industries. The February payroll numbers were also tweaked slightly to show 14,000 jobs were lost - fewer than initially feared.

'The economy is roaring back to life in a way that was completely unimaginable a year ago,' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.

A recovery in America is good news for the rest of the world. Its trading partners will benefit from higher demand and the more buoyant sentiment should spill across the Atlantic.

˜ The US was also heartened by indications that China may be prepared to allow its yuan currency to appreciate in value against the dollar.

The artificially low rate is said to be a major contributor to the global trade imbalances. A depressed yuan makes Chinese imports very cheap and fuels America's trade deficit. But Beijing indicated President Hu Jintau's visit to Washington this month may open the door to an adjustment in value.

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