U.S. jobs gain in March lowest in 9 months

New hires fall to 88,000, more people drop out of labor force

 

By Jeffry Bartash, MarketWatch

Corrects article to reflect number of months since job growth was lower than in March.

WASHINGTON (MarketWatch) — The United States created the fewest number of jobs in March in nine months, adding to a string of reports suggesting companies have cut back on new hires and that the economy is slowing again.

The U.S. added a seasonally adjusted 88,000 jobs — the smallest increase since last June — and nearly half-a-million people stopped looking for work last month, according to data issued by the Labor Department Friday.

Enlarge Image

The March jobs report fell well below Wall Street expectations. Economists polled by MarketWatch had forecast a 190,000 increase in jobs. U.S. stocks slumped after the report.

“This report is a stark reminder of how fragile the U.S. economy remains now four years into the economic expansion,” said Scott Anderson, chief economist of Bank of the West. See more reaction to jobs report.

The unemployment rate fell to 7.6% from 7.7% to mark the lowest level since December 2007, but the decline stemmed from more Americans dropping out of the labor force.

As a result, the participation rate fell again to 63.3% and touched the lowest level since 1979. The rate measures the percentage of working-age Americans who have or want a job.

All the slack in the labor market is sure to worry the Federal Reserve. Analysts say it probably ensures the central bank will prolong its controversial strategy of buying billions in bonds to keep interest rates low as a means to boost the economy.

In Washington, Democrats blamed slow hiring on the unwillingness of Republicans to halt federal spending cuts required by a law known as the sequester. Yet the cuts only began in early March and most economists don’t think they had a big impact. Republicans, for their part, argued that the Obama administration’s policies are holding the economy back.

ECONOMY AND POLITICS | @MKTWEconomics

U.S. jobs gain in March lowest in 9 months
Data adds to a string of reports suggesting companies have cut back on new hires and that the economy is slowing again.
• ‘Unhappy day’: Reactions to March jobs report
• Breaking down the disappointing jobs data
• No QE tapering this year seen
• Manufacturing renaissance? Not in employment
• U.S. trade gap down on crude-oil import fall
• Jobless claims climb to four-month high

The lackluster pace of hiring in March overshadowed upward revisions to job growth in the first two months of 2013. The number of new jobs created in February was revised to 268,000 from 236,000, while January’s figure was revised up to 148,000 from 119,000. Read about why hiring might not have been as weak as reported.

Until the March employment report, the U.S. labor market appeared to be gaining momentum. The economy had added an average of 220,000 jobs a month from November to February in a sharp pickup since last fall.

The disappointing March jobs report has revived concerns that the economy could cool off again in midyear like it did in both 2012 and 2011. In both years, hiring started out strong but later petered out.

Most economists have been predicting the economy would slow in the second quarter after a strong start to the new year. Growth in the second quarter is forecast to decelerate to 2.2% from an estimated 3% in the first three months of 2013. The onset of large federal spending cuts and a soft global economy are among the drags on growth, analysts say.

Click to Play

Takeaways from the jobs report

There’s no way to sugarcoat it: This was a lousy March employment report. Ben Casselman discusses takeaways from the jobs data.