Poor job growth and a large exodus of unemployed workers last month stifled weeks of upbeat economic data and marked a sobering reality check, signaling that hiring was likely to remain weak in the coming months.
Employers added a paltry 88,000 net new jobs in March, the smallest number since June and just one-third of the gain in February.
Retailers, manufacturers and finance companies shed jobs over the month, an indication that consumer spending may be softening as workers grapple with higher payroll taxes and sluggish wage growth.
Normally such a weak job number would push up the jobless rate, but the unemployment figure fell a notch in March to 7.6% as hundreds of thousands of people left the labor force and were no longer counted as jobless.
In fact, the share of working-age Americans who have jobs or are looking for work sank to a 34-year low of 63.3% last month.
"It says job opportunities are so weak, hiring is so low and demand for workers is so depressed that we're just having people drop out or otherwise not enter the labor force," said Heidi Shierholz, an economist at the Economic Policy Institute in Washington.
President Obama's chief economic advisor, Alan Krueger, suggested the automatic federal spending cuts under the so-called sequestration had already begun to hurt the job market, though there was little evidence of that in the March report. The federal government lost 14,000 jobs over the month, but almost all of those came at the U.S. Postal Service.
"While the recovery was gaining traction before sequestration took effect," Krueger said, "these arbitrary and unnecessary cuts to government services will be a head wind in the months to come."
He and other economists cautioned against reading too much into a single month's data. The weather and other special factors may have affected the statistical calculations, analysts said, and the job numbers have bounced up and down in the past.
Yet even after averaging the last three months, the latest jobs report was a big disappointment.
Analysts had hoped that the economy was kicking into higher gear and they had forecast, on average, that 190,000 jobs would be created in March. On Friday, many were worrying out loud that the recovery may be reverting to its past pattern of slumping in the spring and summer.
Some economists predicted that job growth would now hover around 100,000 a month in the second quarter, down from an average of about 170,000 monthly in the first quarter and over the last year.
At that pace, it would barely be enough to keep up with the growing population, let alone absorb the nearly 12 million who are officially unemployed.
Other economists were more optimistic, noting that recent economic indicators showed the housing market growing again, business investment remaining solid and global economic prospects looking better than last year. In addition, some of the domestic political uncertainty has eased with the elections and fiscal cliff battles over.
Even so, these analysts were questioning their assumptions because the labor market has yet to feel the brunt of sequestration and the recent job-growth momentum is now lost.
"The job gain is not only smaller, it's narrower," said Patrick O'Keefe, a former Labor Department official who directs economic research for CohnReznick, an accounting and advisory firm in New York.
Earlier in the week, O'Keefe spoke encouragingly about how the job market had progressed from a crawl to a jog. On Friday, he said, "the jogger tripped on the curb."
Among the positive details in Friday's report, the construction industry hired more workers. Healthcare firms and restaurants continued to bulk up, and accounting businesses also added a healthy number of workers.
Overall, workers' average weekly hours in the private sector rose slightly, but their average hourly earnings were essentially flat. The underemployment situation improved in March, but there were still 7.6 million part-time workers who wanted full-time work.
The disappointing jobs report made perfect sense to Marchella Hall of Hollywood. Early Friday morning, she was one of dozens of jobless workers who crowded into a federally funded labor resource center in downtown Los Angeles.
Source: http://feeds.latimes.com/~r/latimes/business/~3/53oCW5cEMQI/la-fi-jobs-20130406,0,5481757.story
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