WASHINGTON, DC-US employment growth fell down on the job in March, with the jobless rate declining 10 basis points from February but labor market gains posting their weakest showing in five months. The US Bureau of Labor Statistics said Friday that 120,000 jobs were added in March, or half the revised February figure of 240,000.
Economists polled by Reuters and Bloomberg had expected increases in nonfarm payrolls of 203,000 and 205,000, respectively, during the month. “We see a lack of sustainability in terms of strong job growth,” Tony Crescenzi, a strategist at Pacific Investment Management Co. in Newport Beach, CA, said in a Bloomberg radio interview. “This is still not strong enough to create escape velocity, which is to say an economy strong enough to make it on its own without additional monetary stimulus from the Federal Reserve.”
It remains an open question whether the Fed will see the weaker-than-expected March job numbers as reason to consider another round of quantitative easing. In a speech last week, Federal Reserve chairman Ben Bernanke expressed doubts about whether recent job growth was sustainable in the near term. “But we’ll need plenty more evidence before the Fed will make any decisions on that,” Nigel Gault, Boston-based chief US economist for IHS Global Insight, wrote in an analysis Friday.
The underwhelming March numbers were reported after three consecutive months of 200,000 or more jobs being added. “One disappointing jobs report is not reason to panic, but it will dampen some of the optimism about the strength of the recovery this year,” Gault wrote. “Our read is that March is understating the underlying improvement in the labor market, while January and February overstated it.”
The BLS reported that private-sector employment rose by 121,000 during March, offset by 1,000 layoffs at government agencies. Employment in professional and business services—i.e. office-using jobs—continued to trend up in March, rising by 31,000. According to the BLS, employment in this sector has grown by 1.4 million since a recent low point in September 2009.
However, retail employment declined by 34,000 during the month, and the construction industry shed 7,000 jobs. The construction industry’s unemployment rate remains the highest among major job sectors at 17.2%, although that’s down from 20% a year ago.
Unemployment overall dipped slightly to 8.2% after holding steady at 8.3% in January and February. Earlier this week, the Labor Department reported that new unemployment claims fell to 357,000 for the week ending March 31, a four-year low.
Although the BLS hadn’t issued its March reports yet, Mark Zandi, chief economist at Moody’s Analytics in New York City, wrote on Wednesday that “The US economy is performing better, but it can’t achieve strong economic growth until it attains fiscal stability.” Zandi’s latest monthly outlook predicts that unemployment will below 8% by year’s end, and that the US economy will grow at an annual rate of 2.5% through mid-2013 before accelerating to 4% by mid-2014. Full employment, or an unemployment rate below 6%, is expected by the end of 2015, according to Zandi.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
