It was a sip of sour milk.
That’s how Dan Heckman, national investment consultant at US Bank in Prairie Village, reacted Friday to the March jobs report that said employers added a measly 88,000 payroll jobs, or about half the average monthly gain for the last six months.
Employment numbers from the Labor Department showed that March Madness didn’t just wreak havoc with basketball brackets. March also knocked optimistic job growth predictions to the curb.
“There were high expectations. We wanted a strong report,” Heckman said. “So people were extremely disappointed in the jobs number.”
What also shook analysts’ confidence was that the government’s random household survey found the smallest labor force participation rate since 1979. Only 63.3 percent of the 16-and-over population was working or looking for work in March, compared with a share that had ratcheted above 67 percent from late 1996 to early 2001.
The household report also said about 206,000 fewer people in March than in February were working or looking for work, the two factors that define the labor force.
Once again, the “green shoots of spring don’t seem to apply to the U.S. economy,” said Scott Anderson, chief economist at Bank of the West.
The report was especially troublesome, Anderson said, when the job market is compared to the strong stock rally since the first of the year. Corporate profits also are trending higher. But employers continue to keep lids on payroll growth.
Economists note that the shrinking labor force participation rate, a trend for about five years, is partly due to demographics and partly to a flailing economy.
As the big baby boom generation is hitting the age for full Social Security and Medicare benefits, many are easing out of working or looking for work, causing some of the drop in labor force participation. Someone has to have or want a job to be counted as a member of the labor force.
But what worries economists and influences the overall economy negatively is when people who want to work drop out of the labor force because they’re discouraged job hunters and stop looking. That concern particularly focuses on population groups that typically are breadwinners.
For example, the labor force participation rate of men in the key earning years of 45 to 54 has fallen to its lowest percentage — 85.3 percent — since the U.S. Bureau of Labor Statistics began charting that data in 1948. That percentage is lower than it was in the pit of the recent Great Recession.
Rachel Unruh, associate director of the National Skills Coalition, said the rate is low partly because of a skills mismatch between those searching for work and what employers need.
“Nearly 3.6 million jobs are open but go unfilled, in part because employers can’t find workers with the skills to fill them,” Unruh said.
Despite the surprisingly poor job creation estimated for March, many analysts said it was wise to stay calm and wait for clearer data. As has been typical, the bureau revised previously estimated job creation for January and February upward by 61,000 jobs after more detailed establishment payroll information came in.
As the day wore on, Wall Street traders reacted less negatively to the jobs report than they did at the opening bell. The Dow Jones industrial average closed down 40.86 points on the day, minimizing its slide from earlier in the morning when it dropped more than 100 points in the morning.
In actuality, the job numbers reported Friday were “basically unchanged,” according to the statistics bureau. Last month’s unemployment rate of 7.6 percent was little different from February’s 7.7 percent. Also “basically unchanged,” according to the bureau, was the number of unemployed persons, 11.7 million.
Also little changed in March was the number of long-term unemployed — those who have been looking for jobs for 27 weeks or more. That was pegged at 4.6 million, or 39.6 percent of the total unemployed.
The government’s largest measure of unemployment — which includes “discouraged” workers who temporarily have stopped job hunting and workers who have part-time jobs but want to work full time — fell in the month to 13.8 percent from 14.3 percent of the workforce. March hit the lowest rate since 2008.
“It continues to be a very tough employment market in most parts of the country,” said Richard Wahlquist, president of the American Staffing Association.
Data showed that temporary help employment is benefiting from employers’ caution about adding employees. Temporary help was up 6.4 percent in March 2013 compared with March 2012.
Analysts had expected March employment to post a net gain of more than 150,000 nonfarm payroll jobs, maybe even 200,000, so 88,000 was a disappointing punch. And it fueled handwringing about whether the Federal Reserve has any economic stimulus tools left.
Also debated: Did the payroll tax increase that went into effect in January dampen consumer confidence and spending? Did higher gas prices at the pump stymie trips to the malls?
Or, did March “foreshadow a slowdown in payroll growth over the next few months as fiscal contraction at the federal level begins to bite,” suggested Gary Burtless, senior economics fellow at the Brookings Institution.
That contraction didn’t seep into the March data but “is likely to start showing up in April,” said Sophia Koropeckyji, managing director at Moody’s Analytics.
Not to be overlooked, though, are the major employment sectors that gained jobs in March, including professional and business services, health care, construction, and leisure and hospitality.
Major sectors that lost employment included retail trade, which possibly was affected by major snowstorms in March or still may have been easing down from the holiday hiring surge.
The retail slide was “a disturbing barometer” for the nation’s consumer-dependent fiscal health, said Matthew Shay, president of the National Retail Federation, who noted that retail had “consistently provided a lift for our overall economy through this slow recovery period.”
Government also continued its two-year-old shedding of employees, losing a net 7,000 in March. A loss of 14,000 federal jobs more than offset small gains in state and local employment nationally.
The employment report said the average work week for employees on private, nonfarm payrolls inched up to 34.6 hours from 34.5 hours. Analysts take that as indication that employers are asking existing employees to work longer rather than hiring new employees.
Also, average hourly earnings grew by a penny to $23.82 from $23.81 in February. Over the last 12 months, average hourly earnings have risen by 42 cents, or 1.8 percent, which is lower than the inflation rate over that period.
Unfortunately for wage earnings, “Hourly and weekly earnings are unlikely to improve substantially until private-sector job creation acclerates from its average pace over the past two years,” said Maninder Sibia, economist at Contingent Macro Advisors.