US unemployment rate falls to 8.8%, a two year low

The US unemployment rate fell to a new 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.

"This suggests the recovery is continuing," said David Sloan of IFR Economics.

Most of the new jobs were created in the private sector, in factories, shops and health care, as well as in education and several professional and financial services.

The new private sector jobs offset job losses in the public sector, mainly resulting from cuts by local governments.

"The numbers are obviously good and one can hope that we will continue to see the market rise in continuing months," said Bernard Baumohl, managing director and chief global economist of Economic Outlook Group.

If employers 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.

That will do little, however, to alleviate widespread 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.

Inflation fears
Analysts were also worried about the possible impact of rising oil and other commodity and energy prices.

"There's a nagging concern that the job outlook may be in jeopardy as energy prices keep escalating," said Mr Baumohl.

"That will put a squeeze on household spending and business investments, and one has to wonder whether we'll see the pace of hiring slow as a result."

Others pointed to slow wage growth, which could offset the impact of higher energy and commodity prices.

"Soft earnings still highlight that underlying inflation pressures are going to be restrained," said David Mann, regional head of research for the Americas at Standard Chartered in New York.

Earlier this week, the US Department of Commerce unexpectedly cut its estimate of fourth-quarter growth to an annualised rate of 2.8%, from 3.2% previously.