The Bureau of Labor Statistics has released the March 2011 Employment Situation Report.

From the Release...

Nonfarm payroll employment increased by 216,000 in March, and the unemployment rate was little changed at 8.8 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, leisure and hospitality, and mining. Employment in manufacturing continued to trend up.

Here's the nitty-gritty from Reuters...

RTRS-U.S. MARCH NONFARM PAYROLLS +216,000 (CONSENSUS +190,000) VS FEB +194,000 (PREV +192,000), JAN +68,000 (PREV +63,000)
RTRS-US MARCH PRIVATE SECTOR JOBS +230,000 (CONS +200,000), FEB +240,000 (PREV +222,000)
RTRS-U.S. MARCH GOVERNMENT JOBS -14,000 VS FEB -46,000 (PREV -30,000)
RTRS-U.S. MARCH JOBLESS RATE 8.8 PCT (CONSENSUS 8.9 PCT) VS FEB 8.9 PCT (PREV 8.9 PCT)
RTRS-U.S. MARCH AVERAGE HOURLY EARNINGS ALL PRIVATE WORKERS 0.0 PCT (CONS +0.2 PCT) VS FEB 0.0 PCT (PREV 0.0 PCT), TO $22.87 VS FEB $22.87; MARCH YEAR-ON-YEAR EARNINGS +1.7 PCT
RTRS-U.S. MARCH AVERAGE WORKWK ALL PRIVATE WORKERS 34.3 HRS (CONS 34.3 PCT) VS FEB 34.3 HRS (PREV 34.2), FACTORY 40.5 VS 40.6, OVERTIME 3.3 VS 3.3
RTRS-U.S. MARCH FACTORY JOBS +17,000 (CONS. +30,000) VS FEB +32,000 (PREV +33,000)
RTRS-U.S. MARCH GOODS-PRODUCING JOBS +31,000, CONSTRUCTION -1,000, PRIVATE SERVICE-PROVIDING JOBS +199,000, RETAIL +18,000
RTRS-U.S. MARCH AGGREGATE WEEKLY HOURS INDEX FOR ALL PRIVATE WORKERS +0.2 PCT VS FEB +0.5 PCT
RTRS-U.S. MARCH JOBLESS RATE LOWEST SINCE 8.6 PCT IN MARCH 2009
RTRS-U.S. MARCH NONFARM PAYROLLS INCREASE LARGEST SINCE 458,000 IN MAY 2010
RTRS-TABLE-U.S. March nonfarm payrolls rise by 216,000

WHERE'S THE JOBS?

Employment in manufacturing continued to trend up in March (+17,000). Factory job gains continued to be concentrated in durable goods, with over-the-month increases in fabricated metal products (+8,000) and machinery (+5,000).  Employment in durable goods manufacturing has risen by 243,000 since its most recent low in December 2009.

Professional and business services employment rose by 78,000 in March. This industry has added 692,000 jobs since a recent low point in September 2009.

In March, employment in temporary help services rose by 29,000. Temporary help services has added about a half million jobs since August 2009.

Employment in health care continued to rise in March (+37,000). Since the start of the recent recession in December 2007, health care employment has risen by 902,000, while total nonfarm employment has declined by 7.2 million.

The leisure and hospitality industry added 37,000 jobs in March. Growth in food services and drinking places (+27,000)  accounted for most of the increase.

Mining employment rose by 14,000 in March, mostly due to an increase in support activities for mining (+9,000). Since a recent low point in October 2009, mining employment has risen by 96,000.

Employment in local government continued to trend down over the month (-15,000). This sector has lost 416,000 jobs since its employment peak in September 2008.

Construction employment changed little over the month.

GOOD NEWS:  Led by the private sector, non-farm payrolls grew by more than forecast in March and the February and January reports were revised higher by a total of 7,000 jobs. The unemployment rate declined 0.1% to 8.8% to the lowest level in two-years. The jobless rate has declined by one percentage point since November 2010.  Over the month, the number of individuals who were working part time although they would have preferred full-time work was 8.4 million, down from 9.0 million a year earlier.

BAD NEWS: The number of long-term unemployed remained high at 6.1 million, 45.5 percent of total unemployment. Temporary help services has added about a half million jobs since August 2009. Let's hope those jobs become full-time positions. The average work week didn't get any longer and hourly wage rates were flat. Over the past 12 months, average hourly earnings have risen by 1.7 percent while from February 2010 to February 2011, the Consumer Price Index for All Urban Consumers (CPI-U) increased by 2.2 percent. This means real wage growth is negative.  THIS IS THE MARGIN SQUEEZE WE'VE BEEN HARPING ON!

Plain and Simple:  Non-farm payroll employment rose by 216,000 in March and the unemployment rate was little changed at 8.8 percent. Looking beyond a lack of wage growth, this was a strong jobs report. Margin Squeeze concerns should be voiced a bit louder in the days, weeks, and months ahead though.

THE BOTTOM LINE: Job creation is the most important factor in a sustained economic recovery. Unfortunately because consumer demand has yet to prove consistent, firms are only hiring when labor is needed.  Making matters worse, businesses are investing heavily in technology to further improve already very high levels of productivity (automation), which reduces reliance on human brains and brawn. High levels of automated productivity and a large pool of unemployed Americans will only serve to restrain wage growth. Combine these observations with rising living costs and we're looking at a margin squeeze on Main Street.  That spells trouble for consumer spending in the year ahead. Unless of course America leans on their credit cards to absorb rising food and energy prices.  Then we're talking about a whole other problem all together.....

Margin Squeeze = an increase in the cost of living/production without a corresponding uptick in wage growth or ability to pass along higher prices to consumers. The end result, people reduce spending and firms look to trim costs or pass along higher prices to consumers (who are already under pressure at the pump/electric bill/heating oil bill).

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