Jobless rate holds with 192,000 positions added

New York TimesApril 4, 2014 

The U.S. economy created 192,000 jobs in March, better than during the depths of winter but still short of the labor market rebound that many experts had been hoping to see last month, according to data released by the Labor Department on Friday.

Still, in one hopeful sign, the Labor Department said the proportion of Americans in the workforce rose slightly, as the number of people looking for work increased, suggesting that workers were being lured back into the job hunt as openings began to appear.

Another encouraging signal was a revision upward by government statisticians of the number of jobs added in January and February, with employers adding 37,000 more positions than first thought.

The unemployment rate remained flat at 6.7 percent, but that was almost entirely because of an increase of a half-million people in the labor force. That follows healthy gains in the labor force since the beginning of the year.

If it were not for the increase in the size of the labor force, the unemployment rate would have fallen to 6.5 percent.

While the return of Americans to the job hunt is certainly good news, it underscores just how much slack remains in the economy five years into the recovery.

It also means that the unemployment rate is unlikely to keep falling as sharply as it has in the last two years, because people who are again looking for work are counted as unemployed, while those who have given up and dropped out of the labor force are not.

The plunge in the unemployment rate – to 6.7 percent now, from 8.2 percent in March 2012 – has encouraged policymakers at the Federal Reserve to slowly begin easing back on their stimulus efforts.

But even as that so-called tapering process continues as expected for the remainder of 2014, a stabilization in the unemployment rate between 6.5 and 7 percent suggests that the Fed will be in no hurry to raise short-term interest rates.

“The jury is out, but tapering continues,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

He added that the March report provided ammunition for both optimists and pessimists at the Fed, with the pessimists pointing to the still-elevated unemployment rate even as policymakers who favor tighter monetary policy focus on the increase in payrolls.

While the monthly gain of 192,000 jobs in March was below the 200,000 increase Wall Street had been looking for, it was almost exactly in line with the overall monthly average for job gains since the beginning of 2013.

Private employment rose to 116.09 million, finally moving beyond the previous high of 115.98 million recorded at the start of the recession in January 2008.

For December and January, the Labor Department reported anemic growth, though the February employment numbers improved somewhat. Harsh snowstorms and subzero temperatures across many parts of the country over the winter most likely inhibited hiring in weather-sensitive sectors like construction and retail.

Because of the question of the role played by weather, the data for March had been eagerly awaited. Some experts said it was the first month of so-called clean data since the fall. Indeed, analysts had been surprised by just how lackluster the pace of hiring was in previous months, but had been turning cautiously optimistic in recent weeks as other signals like initial claims for unemployment looked more encouraging.

The latest numbers suggest that while the economy is still failing to achieve the kind of escape velocity that experts and policymakers have long sought, it is not falling into the rut some pessimists feared was developing earlier this year.

The increase in jobs was paced by gains in construction, retail and professional services. Government employment remained flat.

“In short, a fairly healthy rise in payrolls, albeit with the help of a reversal of weather effects,” said Jim O'Sullivan, chief U.S. economist at High Frequency Economics, in a note to clients Friday morning. “This report is generally positive for growth while still being consistent with a highly accommodative Fed.”

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