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, marking a decisive shift in the labor market that should help to underpin the economic recovery.

KEY POINTS:

* Nonfarm payrolls rose 216,000 last month, the largest increase since May, the Labor Department said on Friday. * January and February employment figures were revised to show 7,000 more jobs than previously reported.

COMMENTS:

HUGH JOHNSON, CHIEF INVESTMENT OFFICER OF HUGH JOHNSON ADVISORS LLC IN ALBANY, NY:

There is not much that I can say that is really profound. Obviously these numbers, including the revision, are better than had been expected. They are very consistent with the view that the recovery is gaining some momentum. So the economy continues to recover, it's very good news. There are no significant surprises, but if there is a surprise, it is the decline in the unemployment rate from 8.9 to 8.8 percent. That is an indication the labor force is not expanding very rapidly.

On balance though, you look through the numbers and it tells you pretty much what we already knew. There is widespread addition to payrolls with the exception of government. Government continues to, as expected, reduce jobs. These numbers are good numbers, they are better than expected, and it's not a surprise to me that the futures rose in response to these numbers.

This is going to be a good day in the market, the trend in the market is up. It's hard to argue with the case that we have further to go in this bull market economic recovery cycle. It seems on pretty solid footing.

BERNARD BAUMOHL, MANAGING DIRECTOR AND CHIEF GLOBAL ECONOMIST AT THE ECONOMIC OUTLOOK GROUP IN PRINCETON, NEW JERSEY:

The numbers are obviously good and one can hope that we will continue to see the market rise in continuing months. That said, there's a nagging concern that the job outlook may be in jeopardy as energy prices keep escalating because that will put a squeeze on household spending and business investments, and one has to wonder whether we'll see the pace of hiring slow as a result.

DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:

The March non-farm payroll breakdown (payrolls up 216k, unemployment down 0.1 pct to 8.8 pct) was not far from consensus, but for the most part on the firm side, with the exception of ongoing weakness in average hourly earnings. This suggests the recovery is continuing, though weakness in average hourly earnings means growth in personal income is dependent on job growth, and provides some offset to commodity-led inflationary fears. Overall payrolls with a 216k rise were ahead of the consensus...with private firmer at 230k, private the strongest gain of the recovery to date which has clearly gained some momentum.

For the Fed, this data should support perceptions that the recovery is now self-sustaining, but the weakness in average hourly earnings allows the doves to stress that surging commodity prices may mean only a modest pick up in overall inflation. This report is unlikely to resolve the differences of opinion at exist at the Fed.

MARKET REACTION:

STOCKS: U.S. stock index futures rise.

BONDS: U.S. bond prices extend losses.

FOREX: The dollar extends gains versus euro, climbs to more than three-month high against the yen

Unemployment