Employers in the US added fewer jobs than forecast in March, underscoring Federal Reserve Chairman Ben S Bernanke’s concern that recent gains may not be sustained without a pickup in growth.
The 120,000 increase in payrolls, the fewest in five months, followed a revised 240,000 gain in February that was bigger than first estimated, labour department figures showed on Friday in Washington. The March increase was less than the most pessimistic forecast in a Bloomberg News survey in which the median estimate called for a 205,000 rise. Unemployment fell to 8.2 per cent, the lowest since January 2009, from 8.3 per cent.
Faster employment growth that leads to bigger wage gains is necessary to propel consumer spending that accounts for about 70 per cent of the economy. on Friday’s data showed Americans worked fewer hours and earned less on average per week, helping explain why policy makers say interest rates may need to stay low at least through late 2014.
“You’re going to see a slowing in the pace of job growth,” Neil Dutta, an economist at Bank of America Corp in New York, said before the report. “Despite the much ballyhooed recovery in the labour market, we’ve seen more jobs and yet disposable income is weaker.”
Stock-index futures declined after the figures, with the contract on the Standard & Poor’s 500 Index expiring in June falling 0.8 per cent to 1,379 at 8:33 a.m. in New York. The yield on the benchmark 10-year Treasury note fell to 2.10 per cent from 2.18 per cent.
Payroll estimates from 80 economists in the Bloomberg survey ranged from increases of 175,000 to 250,000 after an initially estimated 227,000 gain the prior month. Revisions added a total of 4,000 jobs to payrolls in January and February.
Fewer retail jobs
The March data showed a 34,000 decrease in retail employment, the biggest decline since October 2009.
The unemployment rate, derived from a separate survey of households, was forecast to hold at 8.3 per cent, according to the survey median.
The jobless rate dropped as unemployed workers stopped looking for work and left the labour force. The participation rate, which indicates the share of working-age people in the labour force, fell to 63.8 per cent from 63.9 per cent.
While a 0.9 percentage-point drop in unemployment since August may underpin President Barack Obama’s standing leading up to the vote in November, only one president since World War II — Ronald Reagan — has been re-elected with a jobless rate above six per cent. Reagan won a second term in 1984 with 7.2 per cent unemployment in the month of the election, after the rate had fallen almost three percentage points in the previous 18 months.
Private payrolls
Private payrolls, which exclude government agencies, rose 121,000 in March after a gain of 233,000 the prior month. They were projected to climb by 215,000. Manufacturing payrolls increased by 37,000 after a 31,000 gain.
Strengthening demand is prompting companies like Ford Motor Co, the second-biggest US auto maker, to bring in more workers. The Dearborn, Michigan-based manufacturer boosted its 2012 sales forecast to 14.5 million to 15 million vehicles from a previous projection of 13.5 million to 14.5 million.
“We’ve already announced some shift increases, some adds in terms of shifts this year,” Erich Merkle, sales analyst at Ford, said April 3 on a conference call with analysts. “So, certainly we’ll be adding some people to fill those shifts.”
Employment at service-providers increased 89,000 after a 211,000 gain in February. Professional and business service payrolls rose 31,000 last month, even as temporary hiring declined 7,500.
‘Modest Growth’
“We see modest growth inside the U.S. and demand for labor,” Carl Camden, president and chief executive officer of Kelly Services Inc. (KELYA), a Troy, Michigan-based staffing agency, said March 12 during a conference. The expansion is “a nice steady, not robust, not rock-and-roll, but a steady recovery, capable of producing a steady stream of jobs.”
At the Western Area Career and Technology Center in Canonsburg, Pennsylvania, about 25 miles southwest of Pittsburgh, the job placement rate is 94 percent.
Some companies in the region, home to an energy boom related to shale gas drilling, are starting to compete for workers, Joseph Iannetti, the school’s director said April 4. Enrollment at the campus in Canonsburg, typically less than 400 students, is 430 this year, he said.
“We’re about to go into a really nice labor shortage here,” he said. “We’re seeing increasing demand for people with skill.”
This Year
Matt Stuckey, 42, sought work for several months in 2011. In February, the former U.S. Marine officer became a marketing director for the United Services Automobile Association, a San Antonio, Texas-based provider of financial services to military personnel.
“During the fourth quarter of last year it was very quiet,” he said in a March 27 telephone interview. “Then at the beginning of the year the job market just turned on.”
The Commerce Department last week said the economy expanded at a 3 percent annual pace in the fourth quarter after a 1.8 percent rate in the prior three months. Gross domestic product grew at a 2 percent pace in the first quarter, according to the median estimate in a Bloomberg survey of economists last month.
on Friday’s report also showed construction companies reduced payrolls by 7,000 workers last month after a 6,000 decrease. Government payrolls fell 1,000 in March.
Weekly Earnings
Average weekly earnings fell to $806.96 in March from $807.56, on Friday’s report showed. The average work week for all workers decreased to 34.5 hours from 34.6.
Wage increases are needed to help Americans weather gasoline prices that have increased by 66 cents this year through April 4, to $3.94 a gallon, according to data from AAA, the nation’s largest auto club.
The so-called underemployment rate, which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking, decreased to 14.5 percent from 14.9 percent.
Bernanke, in a speech to economists on March 26, said the employment gains have been a “welcome development. Still, conditions remain far from normal, as shown, for example, by the high level of long-term unemployment and the fact that jobs and hours worked remain well below pre-crisis peaks.”
“We cannot yet be sure that the recent pace of improvement in the labor market will be sustained,” Bernanke said, adding he was particularly concerned about the number people out of work for six months or longer.
The report also showed a decrease in long-term unemployed Americans. The number of people unemployed for 27 weeks or more eased as a percentage of all jobless, to 42.5 percent from 42.6 percent.
