U.S. jobs recovery suffers setback in March
WASHINGTON (Reuters) - U.S. employers hired far fewer workers in March than in previous months, keeping the door open for the Federal Reserve to provide more monetary support for a still sluggish economy.
The report was seized upon by Republicans hoping to make the weak economy the centerpiece of their campaign for November's presidential and congressional elections.
Even as the unemployment rate fell to a three-year low of 8.2 percent, job growth slowed to 120,000 last month, the Labor Department said on Friday, the smallest increase since October.
That was less than half the average monthly increase in the prior three months and way below the lowest estimate in a Reuters survey. Economists had expected an increase of 203,000 and the jobless rate to hold at 8.3 percent.
The numbers likely reflected the fading boost from unseasonably warm winter weather and brought the job market, which had been showing surprising strength since December, more in line with signs of a broader slowdown in the overall economy.
It also backed the caution expressed by Fed Chairman Ben Bernanke last week about whether the labor market could sustain gains above the 200,000 mark when economic growth is tracking a sub-par rate.
The data raises the chances of the U.S. central bank launching a third bond buying program or quantitative easing.
"The economy may not be growing as strongly as the data around the turn of the year, benefiting from favorable weather, suggested," said Michelle Girard, senior economist at RBS in Stamford, Connecticut. "While QE3 may not be seen as the odds-on bet, nothing can be ruled out."
Retail employment surprisingly fell for the second straight month, resulting in the vast private services sector adding jobs at the slowest pace in seven months.
Economists were puzzled by the drop given that retailers such as Macy's and Target reported brisk business in March.
Manufacturing jobs picked up, even though the workweek fell slightly. Factory jobs have increased b y 120,000 so far this year, helped by carmakers trying to meet pent-up demand for motor vehicles.
The gains in manufacturing contributed to lifting hourly earnings by five cents last month, which should help to support spending.
Prices for U.S. Treasury debt rallied on the report, pushing yields to more than three-week lows, as investors anticipated further bond purchases by the Fed. The dollar fell against a basket of currencies.
U.S. stock futures fell more than 1 percent, suggesting that shares could fall on Monday when the New York Stock Exchange reopens after being closed for the Good Friday holiday.
GIVE UP THE SEARCH FOR WORK
The cooling in hiring last month, if sustained, could hurt President Barack Obama's chances of re-election in November.
White House economic adviser Gene Sperling said the data showed the U.S. economy is making progress, but still has a long way to go.
"The economy's on a much much better trajectory than it was when the president came to office and we just have to keep at the policies and keep doing the things that are helping the economy recover," Sperling told Reuters TV.
Mitt Romney, his likely Republican opponent, called the report "very troubling".
"It is increasingly clear the Obama economy is not working and that after three years in office the President's excuses have run out," he said.
While the unemployment rate fell to its lowest level since January 2009, that was mainly because some people gave up the search for work. The household survey - from which the jobless rate is derived and is separate to the measure of new jobs - showed a drop in employment for the first time since June.
The unemployment rate has fallen from 9.1 percent in August.
In one of only a few bright parts of the report, a broad measure of unemployment, which includes people who want to work but have stopped looking and those working only part time but who want more work, fell to a three-year low of 14.5 percent from 14.9 percent.
The economy is believed to have slowed in the first quarter to around a 2 percent annual growth rate from the 3 percent rate in the October-December period.
Despite the slowdown in job growth last month, several economists said it was not the start of a new trend and were hopeful the labor market would not see a repeat of the spring of 2010 and 2011 when job creation faltered.
"This is not the new run rate for payrolls, but it will feed fears that will work to the advantage of the Fed because it will keep rates lower," said Eric Green, chief economist at TD Securities in New York.
"This will fade because we have had this adjustment for the seasonal effects. What we do from here is we move back to 200,000 (jobs) in coming months."
Last month, the services sector added only 90,000, a sharp step back from February's 204,000 gain in payrolls. That was in stark contrast with a survey on the services sector, showing a relatively strong increase in employment.
Retail employment fell dropped 33,800 after falling 28,600 the prior month.
"It's puzzling, I don't think it will continue because the reports from retailers have generally been upbeat. I struggle to understand why these numbers would be so negative," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.
Construction hiring fell 7,000, the second straight monthly decline. Temporary help, a harbinger of future hiring, dropped 7,500. That was first decline since June an d followed a 54,900 rise in February.
Government employment edged down 1,000 after rising 7,000 in February.
(Additional reporting by Laura MacInnis, Editing by Neil Stempleman)
- Tweet this
- Share this
- Digg this
- Oil falls below $86 as oversupply, global economy worries weigh
- Indiana police charge suspect who may have killed for decades
- Total CEO de Margerie killed in Moscow business jet accident
- California woman gets stuck in chimney trying to sneak into home
- UPDATE 2-Texas investor Sam Wyly files for bankruptcy after losing SEC fraud case
India promised on Monday to open up the coal industry to private players and moved closer to selling a stake in a state-run oil company, as Prime Minister Narendra Modi picked up the pace on economic reform days after relaxing fuel price controls. Full Article
Total CEO de Margerie killed in Moscow plane accident - airport spokeswoman. Full Article