Although the payroll gains are coming primarily in services, manufacturing has now added jobs for three months in a row, confirming the signals of robust manufacturing growth from the ISM survey. Manufacturing added 17,000 jobs in March. The gains were concentrated in fabricated metals (up 9,000) and machinery (up 6,000). The manufacturing workweek lengthened to 39.9 hours, back to its January level after a weather-related dip in February. Production-worker hours rose 1.5%, pointing to a big increase in manufacturing output during March.

Construction payrolls rose by 15,000, their first increase since June 2007. It would be premature to conclude that construction employment has turned the corner, though, because it is highly sensitive to the weather, and lost 59,000 jobs in February. As in manufacturing, a weather effect was clear in the workweek, which rose from 36.7 to 37.1 hours.

In the private services sector, 82,000 jobs were added, up from 55,000 in February. About half of the increase was in temporary jobs (40,000), but there were also jobs added in healthcare (27,000), leisure and hospitality (22,000), and retail (15,000). Financial services (down 21,000), professional and technical jobs (down 13,000), and the information sector (down 12,000) continued to lose jobs.

The government added 39,000 jobs. The federal government added 48,000, entirely accounted for by 48,000 temporary Census jobs. So far, the lift in Census jobs has been less sharp than in the run-up to the 2000 Census, even though Census hiring is ultimately expected to be bigger this time. State and local governments trimmed 9,000 jobs, as budget cuts continued to take their toll, although that's a smaller decline than in most recent months.

The unemployment rate held steady at 9.7%. The household survey showed an increase of 264,000 jobs, while the labor force rose by 398,000, so the total number unemployed rose by 134,000. That was not quite enough to move the needle on the jobless rate, which on an unrounded basis came in at 9.749%.

The most comprehensive measure of underemployment (U-6)—which includes workers who would like a job but are not currently looking, plus those working part time who would rather work full time—edged up to 16.9%, from 16.8%. And the number of long-term unemployed (27 weeks or longer) rose by 414,000, hitting 6.5 million.

Driven by the longer workweeks in construction and manufacturing, the overall workweek rose from 33.9 to 34.0 hours. Aggregate hours worked rose 0.4%, more than reversing February's 0.3% decline, and hours worked for the quarter rose at a 2.1% annualized rate. That is the first increase in hours since the fourth quarter of 2007. Because GDP growth slowed in the first quarter, probably to less than half the 5.6% rate of the fourth quarter, the implication is that productivity growth has slowed dramatically.

One clear disappointment in the report was the 0.1% drop in average hourly earnings, taking its year-on-year growth rate down to 1.8%. This hurts consumer spending power. But it is more important that hiring is picking up, which will push up earnings in coming months.

Until this month, the most that we could say was that it looked like job growth was about to turn the corner. Now it seems to have done so. Overall, during 2010, we have been expecting the economy to add around 850,000 jobs (which we may nudge up slightly after today's report), a modest but not jobless recovery. But it will be a long slog to bring down the unemployment rate. As potential workers see jobs being created, some who had given up looking will come back into the labor force, slowing the unemployment decline.