Hiring Cools Even as U.S. Jobless Rate Falls to Four-Year Low
Employers in March added the fewest workers in nine months and the jobless rate fell to a four-year low as the share of Americans in the labor force slumped, marking a pause in the job-market recovery.
Payrolls grew by 88,000, less than the most-pessimistic forecast in a Bloomberg survey, after a revised 268,000 gain in February, Labor Department data showed yesterday in Washington. Unemployment dropped to 7.6 percent, the lowest since December 2008, from 7.7 percent.
The inability to sustain bigger gains in hiring and wages helps explain why the Federal Reserve is maintaining record monetary policy stimulus. Bond yields tumbled and stocks retreated as the report heightened concern that federal budget cuts will temper growth in the world’s largest economy following a first-quarter pickup.
“We’re still in the same slow-growth mode we’ve been in now for the past four years,” said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “The job market’s going to slow, but I don’t think it’s going to cave.”
The Standard & Poor’s 500 Index declined 0.4 percent to close at 1,553.28 yesterday in New York. The yield on the benchmark 10-year Treasury note fell to 1.71 percent, the lowest level of 2013.
The median of 87 estimates in a Bloomberg survey called for a 190,000 advance in payrolls. Revisions added a total of 61,000 jobs to the employment count in January and February.
Some companies are struggling to make do with fewer workers. At Wal-Mart Stores Inc. (WMT), merchandise is piling up in aisles and in the back of stores because the company doesn’t have enough employees to keep shelves stocked, according to interviews with workers.
In the past five years, the world’s largest retailer added 455 U.S. Wal-Mart stores, a 13 percent increase, according to filings and the company’s website. In the same period, its total U.S. workforce, which includes Sam’s Club employees, dropped by about 20,000, or 1.4 percent. Wal-Mart, based in Bentonville, Arkansas, employs about 1.4 million U.S. workers.
“Most American companies are still lean and mean,” said Ethan Harris, co-head of global economics research at Bank of America Corp. in New York. “They’ve been very disciplined about controlling their workforce, their spending and investment.”
Retail payrolls slumped in March by the most since February 2012, and factory employment declined by 3,000, the first drop since September, yesterday’s report showed.
Among those having trouble finding work Howie Appel, 65, who lost his position as a corporate recruiter at HNTB Corp. in Lake Mary, Florida, in 2009. He has worked several part-time jobs since then, he said.
One of his roles is helping others find jobs as executive director of ProNet Career Resources, an unemployment and under- employment support group he founded in 2003. Many of its members are baby boomers struggling to find opportunities as they compete with recent college graduates.
“It’s a very, very slow comeback,” Appel said. “We’re hearing all over the place that there are openings. We’re hearing it, but not seeing it.”
The unemployment rate, derived from a survey of households, was forecast to hold at 7.7 percent, according to the Bloomberg survey median. The March figure was accompanied by a 496,000 decline in the labor force.
The share of the working-age population in the labor force, known as the participation rate, fell to 63.3 percent, the lowest since May 1979. As the participation rate declines, it takes smaller gains in employment to push down the jobless rate. In March, the number of unemployed Americans fell to 11.7 million, the fewest since December 2008.
Job-market progress slowed just as $85 billion in automatic across-the-board government budget cuts, known as sequestration, started March 1. The reductions in planned spending, which began because Congress couldn’t compromise on a debt-reduction strategy, trim 5 percent from domestic agencies and 8 percent for the Defense Department this fiscal year.
“Sequestration is going to have an adverse effect” on the economy, Alan Krueger, chairman of the White House Council of Economic Advisers, said on Bloomberg Television. “That’s one of the headwinds we’re facing.”
Krueger repeated President Barack Obama’s call to replace the cuts with a deficit-reduction package that includes raising more revenue from taxes in addition to reducing outlays. The U.S. needs to continue spending on infrastructure and education to ensure future growth, he said.
Former Treasury Secretary Lawrence Summers said he expects healthy economic growth in the U.S. this year and next and doesn’t see a “need to panic” over the employment report.
Summers, who directed Obama’s National Economic Council for the administration’s first two years, said the economy should expand this year at a rate “north of 2.5 percent.” Next year, there’s “a good chance for above 3 percent” growth, he said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.
Even as hiring slowed, employers boosted hours to meet demand. The average work week for all employees increased by six minutes to 34.6 hours, the highest since February 2012. And temporary-help positions, an indicator of future hiring, increased by 20,000 in March.
Private payrolls, which exclude jobs at government agencies, climbed by 95,000 in March after a revised gain of 254,000 the previous month. Government payrolls decreased by 7,000 last month after a 14,000 increase.
A healthier real-estate market has created the need for more construction jobs since the middle of 2012. Construction companies added 18,000 workers last month after a 49,000 surge in February that was the biggest in almost six years.
The Pollack Shores Real Estate Group, an Atlanta-based apartment developer and property manager, has boosted employment to 120 this week from 93 at the end of 2012. The company plans to build about 2,000 apartments this year, twice as many as last year, said President Steven Shores.
“That will create a significant number of construction jobs,” which are contracted out and not on the company’s staff directly, he said. “We are starting to see a lack of labor supply drive up some pricing in our areas.”
Fed policy makers reiterated in a March 20 statement that they would continue $85 billion of monthly bond purchases until the labor market outlook improves “substantially.” Each month the Fed is purchasing Treasuries and mortgage bonds to keep interest rates low, spur economic growth and trim unemployment.
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