Don’t read too much into the latest employment report.
The March data released early Friday disappointed economists and indicated that the recovery was much more tepid than hoped last month. Yet, despite warnings that the report could mark the beginning of a repeat of 2011 -- when the economic recovery appeared to be gaining steam in the first quarter before sharply falling off -- it’s really too soon to tell whether the country is in for another extended round of job losses.
The economy added 120,000 jobs last month, the Labor Department reported, significantly lower than consensus expectations of just over 200,000. The report broke the three-month streak of 200,000-plus job growth. In time, it could come to be viewed as the first sign that the economy was growing well above a sustainable pace at the beginning of the year.
The report contains clues that hiring is, indeed, cooling off. The overall unemployment rate, for instance, dipped from 8.3 percent in February to 8.2 percent in March, but not because the job market was improving; the change was largely due to people leaving the workforce.
Temporary help declined slightly in March, a sign that employers may be hiring fewer workers in coming months, according to Gary Burtless, an economist at the Brookings Institution. Employers often hire temporary workers to respond to increased demand before bringing on new full-time employees, he said.
But within the report, there were also signs that hiring was moving in the right direction -- and maybe even picking up in some key areas.
“The overall tone of the report was less negative” than the headline payroll gains, wrote analysts at Deutsche Bank. The manufacturing sector, for one, gained 37,000 jobs, making the three-month rate of change the highest it had been since 1997. The U-6 unemployment rate, a broader measure of unemployment, fell from 14.9 percent in February to 14.5 percent in March.
Another sign that the recovery may not be slowing on a long-term basis just yet is the recent strength in weekly jobless claims. They hit a four-year low of 357,000 on Thursday, and the four-week moving average crept down to 361,750 as jobless claims increasingly point toward a strengthening labor market.
And a single month’s slowdown in job creation probably doesn’t spell disaster for President Obama.
“We shouldn’t get too panicked about one month’s numbers,” said Nigel Gault, chief U.S. economist at IHS Global Insight.
But if the weak numbers translate into a two- or three-month stretch, that could become a problem for the incumbent, especially if the much focused-on headline unemployment rate doesn’t inch below 8 percent before November. Republican presidential nomination front-runner Mitt Romney called the March report “weak and very troubling” evidence that the jobs market is “stagnant.” GOP messaging is sure to focus on the fact that the unemployment rate remains well above prerecession levels.
"After 38 months of unemployment above 8 percent, it’s time for the president and Senate Democrats to get serious and work with House Republicans to get Americans back to work," House Majority Whip Kevin McCarthy, R-Calif. said.
The March jobs numbers were a good reminder of just how volatile the employment report can be. April’s report, which will be released the first week of May, will provide some much-needed clues as to whether March was a harbinger of slowdowns to come or a blip as the country continues to swing toward recovery.