After a year of pumping up their payrolls, US employers sharply cut back hiring in March, in a fresh sign of a slowdown in the world’s leading economy.
Labor Department data Friday showed the economy generated a disappointing 126,000 net new jobs in March, half of what was expected and the worst month since December 2013.
The department also trimmed 69,000 from the two previous months, dimming the picture for growth after a year that averaged 287,000 new hires a month across the country.
While the jobless rate held at 5.5 percent, the lowest level since May 2008, and wages showed more strength than in recent months, the March data had other worrisome signs: hours worked fell, unemployment among all adult men and among African Americans rose, and the participation rate in the jobs market fell.
Hiring in the huge service sector slowed but still was a firm 142,000 new positions.
But total jobs in government and in the goods-producing industries declined, with a notable net loss of 11,000 jobs in the mining sector as oil industry layoffs mount with the plunge in crude prices.
Economist Douglas Holtz-Eakin, former head of the Congressional Budget Office, called the report “awful.”
“The headwinds of cold weather, higher dollar, and low oil prices are all good excuses for a bad month. But once again the economy has failed to shift to an anticipated higher gear — an ominous development,” he said.
The one good sign was in wages, a data point closely eyed by economists and the Federal Reserve for signs of labor market tightening and inflation.
After coming in flat last month, average hourly wages rose by 7 cents to $24.86, a solid gain that put the year-on-year increase to 2.1 percent, still modest but ahead of inflation.
Even so, analysts pointed out, average weekly hours worked fell, pulling down slightly average weekly earnings, a sign of relative weakness in economic growth.
Economists noted a number of factors that could explain some of the weakness in March: harsh weather in some parts of the country, the very strong dollar, China’s economic slowdown, and the continuing effect of the West Coast ports slowdown between November and February.
“A range of factors including the weather and the global economic slowdown have affected economic data for the first quarter,” Jason Furman, chairman of President Barack Obama’s Council of Economic Advisers, said in a statement.
Chris Low of FTN Financial pointed in a different direction.
“For our money, it is the collapse of the oil economy, and it likely will continue to weigh on activity” through the second quarter, he said.
Others downplayed the one-month downturn, arguing that the trend of the past two years remains alive.
“It is always difficult to read a report that was clearly skewed by weather,” said Dean Baker of the Center for Economic and Policy Research.
“An economy that is likely growing at close to a 2.5 percent rate would be expected to only generate around 120,000 jobs per month.”
Jim O’Sullivan, chief US economist at High Frequency Economics, pointed to the decline in initial claims for unemployment insurance, a sign of the pace of layoffs, as indicating the labor market is still firming.
“The message from jobless claims is that the underlying trend has not changed significantly,” he said.
The surprise downturn in new jobs still put pause to expectations the Federal Reserve will embark on a series of interest rate rises beginning in June.
“The Fed linked possible rate rises to being ‘reasonably confident'” about the economy, said economist Justin Wolfers of the Peterson Institute for International Economics in Washington.
“I don’t think it’s reasonable to be confident about much.”
Stock markets were closed for the Easter holiday weekend Friday, and will only trade on Monday, but futures were down.
The dollar sank against the euro, going to $1.101 per euro from $1.087. US Treasury bond yields fell: the 5-year note dropped from 1.35 percent to 1.25 percent.