The U.S. economy added 120,000 jobs last month, the smallest gain since October and well below what economists predicted. However, unemployment unexpectedly decreased slightly, to 8.2 percent, according to the U.S. Labor Department, which issued its monthly jobs report this morning.
Stocks aren’t trading today as the markets are closed in observance of Good Friday and the start of Passover; however, the weak report is affecting futures, with Reuters speculating it could mean a Monday market decline.
The sharply lower-than-expected numbers (a MarketWatch survey predicted an optimistic 210,00 increase) were stark evidence of what the Federal Reserve has been saying; without a pickup in economic activity the strong growth of the last two quarters would be hard to sustain.
Speaking last month to the National Association for Business Economics, Fed Chairman Ben Bernanke warned, “Despite the recent improvement, the job market remains far from normal.”The number of people working and total hours worked are still significantly below pre-crisis peaks,” he observed.
Today’s report said the average workweek for all employees on private nonfarm payrolls declined by .1 hours to 34.5 last month. The manufacturing workweek fell by 0.3 hour to 40.7 hours, and factory overtime was unchanged at 3.4 hours.
Wages were up by an average of 5 cents an hour to $23.39. Over the last 12 months, the average wage has increased 2.1 percent for all nonfarm workers.
“You’re going to see a slowing in the pace of job growth,” Neil Dutta, an economist at Bank of America Corp. in New York, told Bloomberg News. “Despite the much ballyhooed recovery in the labor market, we’ve seen more jobs and yet disposable income is weaker.”
The decline in the unemployment rate, a bit of a surprise to labor analysts, was attributed to a decrease in the number of Americans who reported they were in the labor market. In March 2011, 64.2 percent of the civilian population were in the labor force; last month that percentage was 63.8. (As labor force participation declines, so does the unemployment rate.) Still, the actual number of unemployed workers was 12.7 million in March. In February, it was 12.8 million. In March of last year, 13.6 million workers were officially listed as unemployed.
Among the sectors adding jobs last month, manufacturing lead the way with 37,000 new positions. The Labor Department’s Bureau of Labor Statistics said these were strongest in motor vehicles and parts (+12,000), machinery (+7,000), fabricated metals (+5,000), and paper manufacturing (+3,000).
Leisure and hospitality, and healthcare were also strong gainers. Jobs in food services and drinking places rose by 37,000 in March, while healthcare grew by 26,000 positions, 8,000 of them in hospitals and physicians’ offices. The financial sector, a weak performer for months, showed signs of improvement last month, adding 15,000 positions.
The biggest loser was the retail sector, which cut 33,800 jobs. Most of those (21,000) came from cuts by department stores.
One surprising development was the loss of jobs in the temp industry. Temporary and contract workers have been growing for well over a year as business picked up and cautious employers brought on temps. In March, the sector dropped 7,500 positions. In February, it added 55,000 jobs. In the last year, temp jobs grew by 185,000.
Government, which has been shedding jobs at a rapid pace for months, lost only 1,000 in March. Although state governments added positions, mostly in education, much of that gain was offset by the continued reduction in local government jobs.
The Labor Department also revised upward the jobs numbers for February from an initial gain of 227,000 to 240,000, and down for January from the initial 284,000 to 275,000.