For several months now, the job market has been the shining star of the US economy. Even as the housing sector, consumer spending, and other indicators grew unevenly, robust monthly job growth and falling unemployment became a given, bolstering economic optimism even in the face of worrying signs elsewhere.
Then came March.
US employers added just 126,000 jobs last month, according to data released Friday by the Labor Department. That’s a far cry from the 248,000 jobs economists were expecting and nearly 150,000 jobs below a monthly average of about 266,000 since March of 2014. Additionally, job gains for January and February were revised downward by 38,000 and 31,000 jobs, respectively.
The report broke a year-long streak of monthly job gains above 200,000. Overall, March was the worst showing since December 2013.
“The March payroll report was very disappointing, with the gain only about one-half what was expected, and that was on top of a significant downward revision to results in the two preceding months.” MFR Inc. economist Joshua Shapiro wrote in an e-mail. In addition, the average workweek slipped a notch."
There was a sliver of good news: "Earnings were the bright spot in this report," Barclays Research economist Michael Gapen wrote in an e-mailed report. "Average hourly earnings were up 0.3 percent [from last month] and 2.1 percent [year over year], modestly outperforming our expectations."
The unemployment rate held steady at 5.5 percent. That's normally good news, except that is raises another troubling point. One reason the rate is so low is that more people are dropping out of the workforce altogether, a trend analysts hoped would reverse itself as job prospects improved. Labor force participation, which has hovered at historically low levels and has been cause for concern even as job creation surged along, dipped slightly, to 62.7 percent in March. Part of the slide can be credited to retiring Baby Boomers, but participation rates of the youngest workers are also falling, and unemployment for teen workers actually rose, by 0.4 percent.
So, what happened? Winter, for one. Unusually cold temperatures and unrelenting snowfall in many parts of the country have already had a demonstrated effect on other areas of the economy: The pace of the housing market has cooled considerably, and consumer spending took a hit as shoppers stayed indoors or elected to boost their savings. The construction sector shed about 1,000 jobs in March, and factory slowdowns cost manufacturing an additional 1,000 jobs, according to the Labor Department's Bureau of Labor Statistics (BLS).
Another factor, though, was plunging oil prices. Mining jobs took the worst tumble in March, shedding 11,000 jobs as oil companies closed rigs to line up with falling demand. The sector has shed over 30,000 jobs since the beginning of 2015, according to BLS.
Though rising again, gas prices have fallen 33 percent over the past year in the US, according to the AAA auto club, based in Heathrow, Fla.
In addition to stoking worries about the actual strength of the economy, the underwhelming report raised questions about the Federal Reserve’s possible move to raise interest rates, perhaps as early as June A lack of progress on the wage growth front (something Fed Chair Janet Yellen has said the committee is watching closely), combined with the hiring slowdown in March, could cause a delay, Mr. Shapiro writes. “Unless things improve considerably from what we have been seeing, there would seem to be little chance that liftoff would occur [at the Fed’s June 17 committee meeting]. So, the data-watching game continues, with all recent signals pointing in the direction of an economy not strong enough to pull the trigger.”