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Jobless rate falls again, but job growth disappoints
Question of the Day
The U.S. unemployment rate slipped further to a three-year low of 8.2 percent last month as businesses kept churning out new jobs, the Labor Department reported Friday morning.
While the job market continued to improve, the rate of growth in jobs slowed sharply to 120,000 from nearly 250,000 a month earlier this year. The slowdown was widespread, affecting most industries except financial services and manufacturing. The number of hours worked also declined slightly for the first time in months.
“It was not such a Good Friday for the labor market as we had hoped,” said Harm Bandholz, economist with Unicredit Research, noting that the drop-off in job growth was particularly pronounced in health care and temporary employment.
“The only positive aspect in an otherwise soft was report was the slightly faster increase in hourly earnings,” he said. Average wage gains perked up to a 2.1 percent annual rate — the first increase above 2 percent in years.
Still, wages are rising less than the oil-driven rise in consumer prices in the last year, which “implies falling real wages” and leaves workers with a loss of purchasing power, Mr. Bandholz said.
“The further decline in the unemployment rate, while looking good at first glance, is hardly encouraging either, as it has been triggered by a renewed decline in the labor force and not by higher employment,” he said. About 164,000 discouraged workers dropped out of the labor force after not finding jobs last month.
Republican presidential front-runner Mitt Romney was one of a number of GOP officials who pointed to the soft job-creation numbers for March — and the number of workers who have dropped out of the job market altogether — to take a swipe at President Obama, despite the slight dip in the overall unemployment rate.
“This is a weak and very troubling jobs report that shows the employment market remains stagnant,” the former Massachusetts governor said in a statement. “… It is increasingly clear the Obama economy is not working and that after three years in office the president’s excuses have run out.”
But Secretary of Labor Hilda L. Solis countered that the report showed the 25th straight month of job creation under President Obama and more than 4 million jobs have been created since the recovery began in his first year in office in 2009.
“Some months we are seeing tremendous job gains, while other months we are seeing more modest gains,” she said. “But the trend line is clear: our economy is growing and our recovery is durable.”
Mr. Bandholz said the report confirms suspicions that some of the more robust job gains at the beginning of the year were driven by unusually warm winter weather. Many economists and Federal Reserve officials had predicted a slowdown or reversal of the unexpectedly strong winter jobs improvement.
“The recovery is still sub-par,” said John Silvia, chief economist at Wells Fargo Securities. “The income problem remains” as workers have not been able to keep up with inflation.
“The low jobs growth in March was an unpleasant surprise and underscores the fact that a robust jobs recovery has not yet solidified,” said Heidi Shierholz, economist at the Economic Policy Institute.
“The unusually warm winter likely shifted some hiring into the first two months of the year,” said Sophia Koropeckyj, managing director of Moody’s Analytics. Still, the average job gains of 212,000 a month so far this year is likely sustainable and growth will continue at that pace for the rest of the year, she predicted.
“That is solid growth that will slowly absorb the unemployed and attract new workers into the labor market,” she said. “Weaker than expected March gains should not cause alarm since a number of other measures provide corroborating evidence of a slowly improving job market.”
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