Stock index futures added to gains on Friday after the government said nonfarm payrolls rose more than expected, and the unemployment rate fell, providing a strong signal that the U.S. economic recovery is on track.
Nonfarm payrolls rose by 216,000 in March, driven higher by a 230,000 gain in private-sector employment, the Labor Department said. The unemployment rate fell to 8.8 percent in March, the lowest level since March 2009, from 8.9 percent in February.
Economists surveyed by Reuters had expected payrolls to rise by 190,000 after rising a revised 194,000 in February.The government had reported earlier that February payrolls rose 192,000.
The number is in line with continuing drops in jobless claims, and a strong private sector payrolls report from ADP on Wednesdsay.
With a strong report, market participants will likely fuel talk over when the Federal Reserve will exit its monetary stimulus and when it might raise interest rates.
"Here's the conundrum for traders: As terrific as today's number is, it could also be a reason to worry the Fed will seriously consider an early withdrawal of QE2 and begin talk of higher rates to 'slow the recovery,'" said Todd Schoenberger, managing director of LandColt Trading. "If this happens, then investors will have to refocus their attention to quarterly earnings, which could turn out to be a mixed bag and, therefore, result in a very volatile April for equities."
A global economic recovery is taking shape, but economist Nouriel Roubini told CNBC he sees a number of uncertainties that could hurt economic growth.
“I don’t expect them to raise rates until sometime next year...in my view the Fed is going to be more slow and more gradual than the ECB (in terms of policy tightening),” Roubini said.
The jobs report will overshadow other economic data due on Friday and is likely to drive stocks. The March ISM manufacturing index and February construction spending, were both due at 10 a.m.
Auto sales also will be released on Friday, and are expected to rise about 12 percent from last year's depressed levels. High gasoline prices and production problems caused by the Japanese earthquake could slow a recovery, Reuters said, citing analysts.