Dear March,
We got your news that employers added just 126,000 jobs on your watch. Hate to say it, but you have disappointed everyone. No doubt you'll say you were under the weather — literally. Sure, it was cold, but still ... Let's hope April does better.
Sincerely,
America
On Friday, the Labor Department's report on weak jobs growth left economists scrambling to explain what went wrong in March.
Most had forecast about 245,000 new jobs for the month, but they were way off base. The Labor Department said employers added only 126,000 workers. The unemployment rate, which is determined by a separate survey of households, held steady at 5.5 percent.
The disappointing March report confirms a wintertime slowdown. The average monthly gain in the first three months of this year was just 197,000 new jobs, down sharply from an average of 324,000 in the final three months of last year.
So while the positive hiring trend did continue into the new year, it clearly has lost momentum. A lot of people looked at the construction industry — which cut 1,000 jobs last month — and blamed the exceptionally cold temperatures for freezing up so much economic activity.
"One cannot be stunned if wave after wave of severe snow storms and [arctic] temperatures curbed hiring, slashed construction activity, and kept consumers from stores," economist Bernard Baumohl, with The Economic Outlook Group, wrote in his assessment.
This winter brought other problems, such as a drop in the oil-rig count and the West Coast port disruptions, which caused supply-chain reactions. Wells Fargo economists noted that currency changes also hurt, making U.S. exports more expensive this winter: "Manufacturing payrolls edged down by 1,000, with the workweek ticking down, suggesting some modest impact from the stronger dollar."
So fingers can be pointed at some extraordinary factors that weighed down job creation.
But maybe the slowdown's explanation is simpler than that. Maybe it just reflects a cooling of the economy after nearly six years of expansion. The unemployment rate has plunged in recent years, and in the prior 12 months, job growth was averaging a robust 269,000 a month.
So at some point, the labor market was bound to take a breather.
"In retrospect, a correction such as this was very likely," wrote Doug Handler, chief U.S. economist at IHS Global Insight.
Labor Secretary Tom Perez, who spoke with NPR, also noted that March's numbers have to be put into a longer perspective. Consider, he said, that private businesses have added 12.1 million jobs over 61 straight months of job growth, the longest streak on record.
In March 2014, the unemployment rate was 6.6 percent. Perez said that if someone had told him then that the rate would plunge to 5.5 percent in one year, "I would have thought it was an April Fools' joke."
The overall job market's performance in the past year has been strong, he said. "I look at trend data," and the trend has been the worker's friend.
So the big question hanging over the economy is: Did job growth just take a rest during the harsh winter, or is it shifting to a much slower pace?
Handler remains fundamentally optimistic. "This result is more of an aberration than a trend," he said. "The April report will be more in line with stronger reports issued earlier in the year, allowing the March data to be discounted."
And PNC economist Gus Faucher saw some hopeful signs in the wage data, which pointed upward. Workers' wages rose by 2.1 percent over the past year — which beats the consumer inflation rate. "The tighter labor market is leading businesses to raise pay to attract and retain workers," he said.
Still, the report showed enough weakness to suggest the Federal Reserve will be in no rush this summer to raise interest rates.
"Today's sluggish job numbers, job revisions and mild wage growth are signs the Federal Reserve should keep interest rates low for the foreseeable future," AFL-CIO economist Bill Spriggs said. "Today is confirmation the economic recovery is incomplete and we have a long way left to go."
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