April 6 (Bloomberg) -- Employers in the U.S. added fewer jobs than forecast in March, underscoring Federal Reserve Chairman Ben S. Bernanke’s concern that recent gains may not be sustained without a pickup in growth.
The 120,000 increase in payrolls, the fewest in five months, followed a revised 240,000 gain in February that was bigger than first estimated, Labor Department figures showed today in Washington. The March increase was less than the most pessimistic forecast in a Bloomberg News survey in which the median estimate called for a 205,000 rise. Unemployment fell to 8.2 percent, the lowest since January 2009, from 8.3 percent.
Faster employment growth that leads to bigger wage gains is necessary to propel consumer spending that accounts for about 70 percent of the economy. Today’s data also showed Americans worked fewer hours and earned less on average per week, helping explain why Fed policy makers say interest rates may need to stay low at least through late 2014.
“We see a lack of sustainability in terms of strong job growth,” Tony Crescenzi, a strategist at Pacific Investment Management Co. in Newport Beach, California, said in a radio interview on ‘Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “This is still not strong enough to create escape velocity, which is to say an economy strong enough to make it on its own without additional monetary stimulus from the Federal Reserve.”
Stock-index futures declined after the figures, with the contract on the Standard & Poor’s 500 Index expiring in June falling 1 percent to 1,376.3 at 8:51 a.m. in New York. The yield on the benchmark 10-year Treasury note fell to 2.08 percent from 2.18 percent.
Payroll estimates from 80 economists in the Bloomberg survey ranged from increases of 175,000 to 250,000 after an initially estimated 227,000 gain the prior month. Revisions added a total of 4,000 jobs to payrolls in January and February.
The March data showed a 34,000 decrease in retail employment, the biggest decline since October 2009.
The unemployment rate, derived from a separate survey of households, was forecast to hold at 8.3 percent, according to the survey median.
The jobless rate dropped as unemployed workers stopped looking for work and left the labor force. The participation rate, which indicates the share of working-age people in the labor force, fell to 63.8 percent from 63.9 percent.
Jobs and Obama
While a 0.9 percentage-point drop in unemployment since August may underpin President Barack Obama’s standing leading up to the vote in November, only one president since World War II - - Ronald Reagan -- has been re-elected with a jobless rate above 6 percent. Reagan won a second term in 1984 with 7.2 percent unemployment in the month of the election, after the rate had fallen almost three percentage points in the previous 18 months.
Private payrolls, which exclude government agencies, rose 121,000 in March after a gain of 233,000 the prior month. They were projected to climb by 215,000. Manufacturing payrolls increased by 37,000 after a 31,000 gain.
Sustained auto sales is prompting Ford Motor Co., the second-biggest U.S. automaker, to bring in more workers. The Dearborn, Michigan-based manufacturer boosted its 2012 sales forecast to 14.5 million to 15 million vehicles from a previous projection of 13.5 million to 14.5 million.
“We’ve already announced some shift increases, some adds in terms of shifts this year,” Erich Merkle, sales analyst at Ford, said April 3 on a conference call with analysts. “So, certainly we’ll be adding some people to fill those shifts.”