U.S. employment recorded a second straight month of solid gains in March and the jobless rate fell to a two-year low of 8.8 percent, underscoring a decisive shift in the labor market that should help to underpin the economic recovery.
Nonfarm payrolls rose 216,000 last month, the largest increase since May, the Labor Department said on Friday. The gain built on the 194,000 new positions added in February.
BLS report here.
As noted elsewhere, even with these solid gains, the pace of net job creation is far below that necessary to rapidly reduce the unemployment rate.
Figure 1 depicts the trend in the standard nonfarm payroll employment series, the same series excluding temporary census workers, and the household series adjusted to conform to the nonfarm payroll concept.
Figure 1: Nonfarm payroll employment series (blue), ex.-temporary census workers (red), and household survey series adjusted to nonfarm payroll employment series (green), in 000′s, all seasonally adjusted. NBER defined recession dates shaded gray. Source: BLS, employment situation, via FRED, BLS, and NBER.
It does seem to be the case that an actual trend is in place. I find it interesting that the adjusted household (research) series — which was developed (in my understanding) partly at the instigation of conservative economist criticisms of the standard establishment based series — has received so little attention. That series has been both consistently higher than the establishment series (by a nontrivial 1.7 million!), and growing faster. That being said, the household series does have a higher degree of variability , so I understand in part the downweighting (although not to zero).
Disaggregating slightly, it’s apparent that private sector employment is rising, as are aggregate hours. The manufacturing sector, in particular, is growing rapidly in terms of numbers (ex-supervisory), and especially in terms of aggregate hours. Both of these observations are highlighted in Figures 2 and 3. In addition, average hours per week manufacturing is now above pre-recession levels, and in fact higher than at any time during the Bush Administration.
Figure 2: Log private nonfarm payroll employment series (blue), and aggregate weekly hours index (red), all seasonally adjusted, normalized to 2007M12=0. NBER defined recession dates shaded gray. Source: BLS, employment situation, via FRED, NBER, and author’s calculations.
Figure 3: Log manufacturing employment series (blue), and aggregate weekly hours index (red), all seasonally adjusted, ex.-supervisory workers, normalized to 2007M12=0. NBER defined recession dates shaded gray. Source: BLS, employment situation, via FRED, NBER, and author’s calculations.
The rise in manufacturing sector employment and hours (and orders ) is consistent with the view that rebalancing the US economy towards exports (see here) will entail the production of more tradable goods (and services). (Aside from construction, the broad-based nature of the growth of employment suggests to me a somewhat less-than-dominant role for the structural unemployment/skills-mismatch approach to explaining unemployment).  
Finally, on a related note, backwards-looking high frequency indicators for overall economic activity still seem to be rising. Figure 4 depicts the official GDP series, as well as two estimates of monthly GDP.
Figure 4: Real GDP (blue bars), e-forecasting estimate of GDP (red line), and Macroeconomic Advisers estimate of GDP (green line), all in bn Ch.2005, SAAR. NBER defined recession dates shaded gray. Source: BEA, 2010Q4 3rd GDP release, e-forecasting, Macroeconomic Advisers, NBER.
Growth in real activity seems to be in place. Why that hasn’t manifested itself in a proportionate fashion for employment remains to be explained.
Returning to the employment situation release, it’s of interest to note what is contracting in employment. In addition to construction, government had a net reduction of 14,000. More than 100% of that change was accounted for by the reduction in local government employment, which fell 15,000 (seasonally adjusted).