Unemployment Drops in U.S Economy

Good news for the American economy amidst the slumps in housing and manufacturing sectors. More workers were added by U.S employers in March than what was expected. To top it all, the jobless rate matched a five-year low, giving the economy a spark.

The Labor Department reported that the jobless rate fell to 4.4 percent, in complete disregard to the predictions that it will rise. The report takes off the stress from Federal Reserve Chairman Ben S. Bernanke to cut interest.

Cheney, chief economist at John Hancock Financial Services Inc. in Boston said, "The expansion is going to keep rolling. The Fed isn't going to move rates any time this year."

Workers' average hourly earnings rose 0.3 percent, after a 0.4 percent increase the previous month. Average weekly earnings rose to $583.76 last month from $580.01 in February. Copious jobs and better paychecks are giving more people more money to spend, thus averting the housing slump from spreading to the rest of the economy.

On a sectoral basis, builders and retailers augmented hiring, while factories continued to lose jobs. Banking, insurance, restaurants all added to the payrolls. Retail, education, health care and leisure also grew substantially.

A confident Joshua Shapiro, chief economist of MFR said, "We don't create that many manufacturing jobs in this country, but the fact of the matter is the job market is very, very healthy. And it's not like this is a fluky, one-off thing. There's a whole host of evidence about the labor market that points to strength."

Dean Maki, chief U.S. economist at Barclays Capital in New York echoed Shapiro’s opinion, "This points to continued strong income growth for consumers and also suggests the somewhat softer GDP numbers we've seen have not generated any softness in the labor Market."

Fed Chairman Bernanke expressed happiness on the trend and claimed that the ongoing increases in employment, along with some pickup in real wages, have helped sustain consumer spending. He hoped that growth in consumer spending would maintain the economic expansion in coming quarters.

The overall trend bodes well for the U.S economy as it suggests that income will continue to buoy household consumption, which in turn will improve business investment.