Employers hired fewer workers than forecast in March and a slump in the size of the labor force pushed the jobless rate down to a four-year low, indicating the U.S. job market is struggling to make bigger strides.
Payrolls grew by 88,000 workers, the smallest gain in nine months and less than the most-pessimistic forecast in a Bloomberg survey, after a revised 268,000 February increase, Labor Department data showed today in Washington. The median forecast of 87 economists called for a 190,000 gain. The jobless rate fell to 7.6% from 7.7%.
Tempered hiring plans suggest companies are confident in their ability to meet demand with the existing workforce as federal budget cuts cloud the economic outlook. The absence of sustained and bigger gains in employment and earnings underscores the Federal Reserve’s view that more progress is needed before record monetary policy stimulus can be scaled back.
“Hiring is still weak overall,” Scott Anderson, chief economist at Bank of the West in San Francisco, said before the report. “We could see some improvement in the economy in the second half but not enough to move the needle on payroll growth. The Fed will remain fully accommodative through the end of the year.”
The unemployment rate, derived from a separate survey of households, was forecast to hold at 7.7%, according to the Bloomberg survey median. The figure, the lowest since December 2008, reflected a 496,000 decline in the size of the labor force.
The labor force participation rate fell to 63.3%, the lowest since May 1979.
Stock-index futures declined after the figures, with the contract on the Standard & Poor’s 500 Index falling 1.1% to 1,537.7 at 8:43 a.m. in New York.
The difference between today’s outcome and the average estimate of economists surveyed by Bloomberg was 3.5 times larger the poll’s standard deviation, or the average divergence between what each economist forecast and the mean. The U.S. dollar dropped 0.5% against the euro, while the yield on the benchmark 10-year note fell 6.3 basis points.
Factory employment fell and retail payrolls slumped the most since February 2012.