It looks as if the “spring swoon” is back.
U.S. employers increased their payrolls by 88,000 last month, compared with 268,000 in February, according to a Labor Department report released Friday. It was the slowest pace of growth since last June, and less than half of what economists had expected.
It also was the start of a third consecutive spring in which employers have tapered off their hiring, even after the Labor Department adjusted the numbers for the usual seasonal changes. Slowdowns in the previous two years could be attributed to flare-ups in the European debt crisis, but this time the cause is unclear. The recent payroll tax increase or political gridlock in Washington could be to blame for the sudden slowdown, but neither seems to be showing up much in other relevant economic data.
“I’m at a bit of loss as to how to explain it,” said Paul Dales, senior U.S. economist at Capital Economics. “Even if this is the start of another springtime-summertime slowdown, we’re hoping it’ll be a bit more modest than it was in previous years, because the housing market is doing very well.”
The unemployment rate, which comes from a different survey, ticked down to 7.6 percent in March, from 7.7 percent, but for an unwelcome reason: More people dropped out of the labor force, rather than more got jobs.
The labor force participation rate has not been this low — 63.3 percent — since 1979, a time when women were less likely to be working. Baby boomer retirements may account for part of the slide, but discouragement about job prospects in a mediocre economy still seems to be playing a large role, economists say.
“The drop in the participation rate has been centered on younger workers,” said Joshua Shapiro, chief economist at MFR Inc., “many of whom have given up hope of finding a decent job and are instead continuing in school and racking up enormous amounts of student debt, which has contributed to the recent surge in consumer credit outstanding.”
Still, as always, economists cautioned not to draw too many conclusions from one month’s report, because the numbers will inevitably be revised.
“Remember that we’ve had a pattern of upward revisions,” said John Ryding, the chief economist at RDQ Economics, noting that the government on Friday revised January and February’s net growth upward by a total of 61,000 jobs. “Before we read too much into it, bear in mind we have at least two more cracks of the whip before the number is really finalized.”
March’s job gains were concentrated in professional and business services and health care, while the government again shed workers.