Slowdown in US jobs growth deals a blow to Obama
Published 07/04/2012 | 05:00
Barack Obama: said market still faced 'ups and downs'
A SLUGGISH US economy added jobs at a far slower pace than had been expected in March, even as the unemployment rate fell to a three-year low of 8.2pc.
Firms added 120,000 jobs last month, the US Labour Department said yesterday. That is the smallest increase since October. Economists had expected an increase of 203,000.
The news prompted President Barack Obama to warn that the US job market still faced "ups and downs".
The retail sector shed jobs for the second straight month, pulling down job growth in the massive service sector. Manufacturing jobs picked up a little but hours worked slipped back.
The weak employment growth reflected the fading boost from unseasonably warm winter weather and brought the jobs market more in line with a broader slowdown in the overall economy.
"Given that the report reflects only one month of data and that some of the underlying cyclical sectors registered payroll gains, we do not view it as conclusively signalling a shift to a lower trend rate of employment growth," said Michael Gapen, a senior economist at Barclays in New York.
Referring to the possibility that the Federal Reserve may provide further monetary support, he added: "The numbers leave the door open for further accommodation and may shift the decision point to the June meeting as the Fed continues to monitor the incoming data."
US stocks slipped on the disappointing data, with S&P 500 stock index futures shedding 1.2pc. The New York Stock Exchange was closed yesterday for the Good Friday holiday.
US Treasury debt prices turned sharply higher, lowering yields on expectations that the report increased chances for more Federal Reserve bond buying. The dollar turned lower versus the euro.
The jobs report backs the caution expressed by Fed chairman Ben Bernanke last week as to whether the labour market could sustain gains above the 200,000 mark when economic growth is tracking a sub-par rate.
The economy is believed to have slowed in the first quarter to around a 2pc annual rate from the 3pc rate in the October-December period.
The cooling in hiring last month, if sustained, could hurt Mr Obama's chances of re-election in November.
White House economic adviser Gene Sperling said the data showed that the US economy was making progress, but still had a long way to go.
However, Mitt Romney, Mr Obama's likely Republican opponent, called the report "very troubling". He added: "It is clear that the Obama economy is not working."
While the unemployment rate fell to its lowest level since January 2009, that was mainly because some people simply gave up the search for work.
The household survey -- from which the jobless rate is derived and which is separate to the measure of new jobs -- showed a drop in employment for the first time since June.
The unemployment rate has fallen from 9.1pc in August.