WASHINGTON — A sharp slowdown in hiring during March, reported Friday by the Labor Department, renewed concern that the U.S. economy is still failing to fire on all cylinders.
Employers added a fewer-than-expected 120,000 jobs last month, about half as many as anticipated, in a dismal report from the Bureau of Labor Statistics. Still, the unemployment rate ticked down a tenth of a point to 8.2 percent — due to shrinkage in the workforce — adding to the confusion greeting the March numbers.
The numbers contradicted several recent positive economic reports, but also came as the prices of crude oil and gasoline are soaring. Oil prices jumped almost $2 on Thursday to settle at $103.31 a barrel ahead of the Easter weekend. A gallon of gasoline averaged $3.936 on Friday, up from $3.761 a month ago.
The question is whether March’s weak jobs report is the start of a trend.
“Despite the disappointing numbers for March, I continue to expect a job gain of close to 2 million this year and unemployment rate just below 8 percent by year's end,” said Mark Zandi, the chief economist for forecaster Moody’s Analytics. “This isn't boom times, but it is consistent with an economy that continues to gain traction.
“I was expecting to be disappointed at some point this spring, given the payback from the extraordinarily warm winter weather.”
The warm winter led employers to hire earlier than usual. The “job market wasn't as strong as the gains experienced this winter, and it isn't as weak as the soft numbers this spring will suggest,” he added.
Usually when monthly employment numbers are disappointing, stocks plunge. But the markets were closed for Good Friday and Passover, so analysts expect a rough ride Monday on Wall Street.
Economists had been expecting jobs growth in the range of 200,000 to 250,000, in part because Wednesday’s ADP National Employment Report, a gauge of private payrolls, found that 209,000 jobs were added in March.
Almost half of those jobs — about 100,000 — were added by small businesses, which the broader BLS survey often doesn't capture, although they appear in the ADP survey, compiled by payroll giant ADP and forecaster Macroeconomic Advisers.
The government’s four-week average of new unemployment claims, reported Thursday, fell to just under 362,000, indicating the recovery’s gathering steam. Given the ADP and claims numbers, many economists attributed the weak March numbers to seasonal factors, such as the warm winter, that might have accelerated hiring.
Bank of America economists Neil Dutta and Ethan Harris didn’t buy that view.
“The weather does not appear to be a material factor in today’s report. The number of workers not at work due to bad weather ran 114,000, below the 174,000 average going back to 2007,” they wrote in a note to investors. “Despite today’s weakness, note that payrolls have a lot of noise; the trend over the last three months is solid, with private payrolls expanding by 210,000 on average.”
Economists for forecaster RDQ Economics in New York predicted that the weak report would be revised upward later.
“On the face of it, this report will be viewed as disappointing because of the modest gain in payrolls. However, other reports suggest that employment growth was much stronger, and the March payroll data have to go through two rounds of revisions over the next two months,” RDQ wrote.
The January jobs report was revised down by 9,000 jobs on Friday, and the February report was revised up by 13,000, so the trend line was largely unchanged. The previous two months were among the strongest months for job creation of President Barack Obama’s term, but the March numbers weren’t good news for his re-election team. Still, the president greeted them as if they were.
Speaking at a White House forum on women and the economy, Obama said, “We welcome today’s news that our businesses created another 121,000 jobs last month, and the unemployment rate ticked down. Our economy has now created more than 4 million private-sector jobs over the past two years, and more than 600,000 in the past three months alone.”
He cautioned, however, that “there will still be ups and downs.”
One man who wants his job, GOP presidential front-runner Mitt Romney, wasted little time before pouncing on Friday’s jobs numbers.
“This is a weak and very troubling jobs report that shows the employment market remains stagnant. Millions of Americans are paying a high price for President Obama's economic policies, and more and more people are growing so discouraged that they are dropping out of the labor force altogether,” Romney said in a statement. “It is increasingly clear the Obama economy is not working and that after three years in office the president's excuses have run out.”
The March jobs numbers conflicted with a range of other positive economic indicators. For example, retailers shed almost 34,000 jobs in March, a significant number. Yet retail sales continue to thrive better than forecasters had projected.
Manufacturing, generally a good bellwether of demand, added 37,000 jobs in March. That’s a sign of a more robust economy than the broader numbers might indicate.
“Factory employment has risen by 470,000 since a recent low point in January 2010,” the BLS report said.
The National Association of Manufacturers was pleased. Frank Vargo, its vice president of international economic affairs, noted in the association's Shopfloor.org blog that “the March manufacturing jobs gain accounted for nearly one-third of the entire private-sector increase.”
Still, there were plenty of signs of trouble. One was that the hard-hit construction sector fell another 7,000 jobs. Another, that the white-collar category of professional and business services was soft at 31,000 new jobs, while temporary employment fell by 7,500. That’s may be significant, because temp jobs tend to be steppingstones to full-time employment.
MARCH BY THE NUMBERS:
— Retail, down 33,800.
— Temporary help services, down 7,500.
— Construction, down 7,000.
— Government jobs, down 1,000.
—Transportation and warehousing, up 2,800.
— Financial services, up 15,000.
— Health care, up 26,000.
— Professional and business services, up 31,000.
— Manufacturing, up 37,000.
— Leisure and hospitality up 39,000.
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