“It’s not going to alter the Fed’s approach,” Richard Schlanger, a vice president at Pioneer Investments in Boston and a member of a group managing $20 billion in fixed-income securities, said of the jobs report. “I think they’re very concerned, obviously, with the decline in the participation rate.”
The unemployment rate, derived from a separate survey of households, dropped to 7.6% versus a 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 growth in payrolls followed a revised 268,000 gain in February that was higher than first estimated, Labor Department figures showed. The median forecast of 87 economists surveyed by Bloomberg projected an advance of 190,000.
The economy added an average of 179,000 people a month to nonfarm payrolls in 2011 and 2012, Labor Department data show. The jobless rate had stayed above 8% since February 2009 until it broke the trend in September.
The U.S. central bank has been buying $85 billion of bonds each month since the start of the year, $45 billion in Treasuries and $40 billion of mortgage debt, in an effort to hold down borrowing costs and encourage economic growth. It has kept its benchmark interest-rate target for overnight lending between banks in a range of zero to 0.25% since 2008 to support the economy.
Policy makers reiterated March 20 the rate will stay near zero as long as the unemployment rate is above 6.5% and inflation is projected to be no more than 2.5%. They said the purchases will continue until employment improves.
Swaps traders have pushed back expectations for the Fed first interest-rate increase since adopting extraordinary monetary stimulus to about November 2015 after slower jobs growth in March. Yesterday, OIS showed July 2015 as the likely date for a rate increase.
The central bank’s next policy meeting is scheduled for April 30-May 1.
The yield on Treasury 10-year notes fell earlier this week as investors sought U.S. debt as policy makers in Japan and the euro zone promised more easing.
New Bank of Japan Governor Haruhiko Kuroda said yesterday the central bank would double its monthly asset purchases in a bid to encourage inflation, while European Central Bank President Mario Draghi said the ECB stands ready to cut interest rates and consider additional measures to boost growth as the region’s sovereign-debt crisis enters its fourth year.