US hiring slows amid uncertainty about economy
WASHINGTON—The U.S. job market slowed in March as companies hit the brakes on hiring amid uncertainty about the economy's growth prospects. The unemployment rate dipped, but mostly because more Americans stopped looking for work.
The Labor Department said Friday that the economy added 120,000 jobs in March, down from more than 200,000 in each of the previous three months.
The unemployment rate fell to 8.2 percent. The rate has dropped nearly a full percentage point since August and is now at its lowest level since January 2009.
But the rate dropped last month because fewer people searched for jobs. The official unemployment tally only includes those seeking work.
Despite the pullback in March, the economy has added 858,000 jobs since December -- the best four months of hiring in two years.
A mild winter may have partially influenced the hiring in March. January and February were unusually warm, which allowed construction firms and other companies to hire people for outdoor work several weeks earlier than usual -- effectively stealing jobs from March.
The job market might face bigger problems. Federal Reserve Chairman Ben Bernanke has warned that the economy is not growing fast enough to sustain recent hiring gains. Many analysts are already scaling back their forecasts for corporate profits in the January-March quarter because of weaker growth.
If employers retreat on hiring, consumers could lose confidence in the economy and slow spending. Slower job growth could also hurt President Barack Obama's re-election hopes.
Economists cautioned that it's just one weak month after three solid gains. Many were encouraged by strong hiring at factories, hotels and restaurants -- businesses that reflect the health of the economy.
And government hiring was little changed in March, a positive sign after months of layoffs at the state and local level.
"We are disappointed," said Anthony Chan, chief economist at JPMorgan Wealth Management. "But when you go inside and lift the hood, the numbers look a little better."
Obama emphasized that the economy is still improving, if fitfully.
"It's clear to every American that there will still be ups and downs along the way and that we've got a lot more work to do," Obama said during remarks at a White House forum on women and the economy.
Most investors didn't have the chance to deliver a verdict on the report. The stock market was closed for the Good Friday holiday. Bond markets were open until noon and index futures traded for 45 minutes after the report was released.
Treasury yields and stock futures dropped sharply after the report came out. Both were little changed in the minutes before the report was released.
The biggest hit to the job market in March was at retail stores. They shed nearly 34,000 jobs after cutting nearly 29,000 in February. Temporary help firms dropped almost 8,000 -- a potentially bad sign for the job market because companies often hire temp workers before adding full timers.
But manufacturers added 37,000 jobs. Hotels and restaurants added 39,000. And business and professional services added 31,000 jobs.
There also was improvement in a broader measure of weakness in the job market. The percentage of Americans who are either unemployed, have given up looking for work or have had to settle for part-time work fell from 14.9 percent in February to 14.5 percent last month.
More than 5.3 million Americans, or 42.5 percent of the unemployed, had been out of work for six months or longer in March.
Hiring was slightly better in January and February than first reported. The government revised up job growth in those months by 4,000.
Hourly wages rose 5 cents to an average $23.39. The average workweek, though, fell slightly to 34.5 hours in March.
Obama's re-election hopes may depend on continued improvement in the unemployment rate and job creation.
Former Massachusetts Gov. Mitt Romney, the likely Republican challenger, this week blamed the president's policies for slow growth and high unemployment.
The Obama campaign has said that Romney would reinstate policies that led to the recession -- lower taxes for the wealthy and less regulation for business.
For many, what matters most is the unemployment rate. It was 7.8 percent when Obama entered office in January 2009 and peaked at 10 percent nine months later. Since August, it has dropped from 9.1 percent to March's 8.2 percent.
No incumbent since World War II has faced voters with unemployment higher than 7.8 percent.
Other data suggest the economic recovery is gaining strength. The number of Americans seeking unemployment benefits fell last week to a four-year low, the government said Thursday. Consumers are more confident and spending more.
The service sector expanded at a healthy clip in March. Factories are busier. Companies are ordering more machinery and other equipment.
Still, economists have worried that job growth couldn't sustain the strong December-February pace without stronger economic growth.
And a spike in gasoline prices could discourage force consumers to cut spending on appliances, vacations and home improvements -- big purchases that drive growth.
Most economists expect annual growth this year of just 2.5 percent. Normally, it takes annual growth of 4 percent to lower the unemployment rate 1 percentage point over a year.
The job market is improving largely because the pace of layoffs has fallen sharply. The staffing firm Challenger, Gray & Christmas reported Thursday that planned layoffs fell 27 percent from February to March. Hiring, meanwhile, is still running nearly 20 percent below pre-recession levels.