Businesses sharply reduced their pace of hiring in March, according to government data released Friday morning, deflating hopes that the nation’s economy is ready for takeoff.
The Labor Department reported that 88,000 jobs were created last month. Although industries such as construction and health care reported gains, they brought on fewer workers than in previous months.
Meanwhile, the U.S. Postal Service alone shed 12,000 jobs. And the retailer sector lost 24,000 jobs after six straight months of increases.
The closely watched government report was particularly disappointing because it came on the heels of a stronger February than expected. The Labor Department on Friday actually moved up its estimate of that month’s job growth to 268,000.
“The job market continues to improve — but in fits and starts,” said Mark Zandi, chief economist of Moody’s Analytics.
The drop-off in the March data follows a pattern established over the past two years, in which momentum in the winter dissipates by the summer. Several other economic indicators this week have clocked in below expectations. The ADP National Employment Report estimates that 158,000 jobs were added in March, significantly lower than predicted. And the number of people filing for new unemployment benefits rose to 385,000 during the last week of March.
A Gallup report released Thursday showed that the percentage of Americans holding full-time jobs has remained essentially unchanged over the past year. Gallup chief economist Dennis Jacobe said the recent spate of job growth has done little more than keep pace with population growth.
“If you’re out there looking for a job, the dismal situation is no better now than it was a year ago,” he said.
Some businesses have cited the uncertainty and cost of government regulation as key factors that are holding back hiring. About 15 percent of small- and medium-size businesses surveyed by PNC said they planned to bring on full-time workers in the next six months, down from 28 percent during the same period last year. Lack of demand was the primary reason, followed by government regulation, according to the report released Thursday.
“Small- and medium-sized businesses have really been through the wringer,” said Gus Faucher, senior macroeconomist at PNC. “They’re still being quite cautious.”
Still, there are glimmers of life in the economy. The rebound in the real estate market has helped rebuild the equity many Americans have in their homes. That is not only helping consumers feel more comfortable spending money, but it’s also spurring new hiring in construction. Major stock market indexes hit record highs last month, and Americans’ retirement accounts have reached new levels as well.
If the economic recovery gets back on track, the Federal Reserve could start dialing back its massive stimulus program as soon as this summer. But a sustained slump could change the game.
“I don’t want to be complacent,” Chicago Fed President Charles L. Evans said Thursday during a panel discussion at the University of Dayton, according to Bloomberg. “I want to make sure I have enough confidence in the improvement in the labor market outlook.”
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