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Christian Science Monitor...
Economy adds
120,000 jobs.
Why the dip from
bigger gains in early 2012?
By Ron Scherer
April 6, 2012
The unemployment rate fell from 8.3 percent to 8.2 percent in March.
Economists had been expecting higher numbers of new jobs.
Economy adds 120,000 jobs. The unemployment rate fell from 8.3 percent
to 8.2 percent in March.
According to the government, the economy added only 120,000 jobs after
much larger gains in January and February. The unemployment rate fell
from 8.3 percent to 8.2 percent.
Economists had been expecting higher numbers of new jobs – between
200,000 and 300,000. But now, they think the relatively balmy weather
in January and February prompted many employers to start their spring
hiring earlier. At the same time, the economy – especially retailers –
may be hitting some head winds as a result of gasoline prices that are
approaching $4 a gallon.
Economists cautioned that a month’s slowdown in hiring does not
indicate the economy is collapsing. But there is little doubt that the
less-than-robust hiring opens the door for Republicans to hammer
President Obama on his handling of the economy. A slower rate of job
growth may also force the Federal Reserve to weigh yet another round of
monetary stimulus. And the stock market, which has been rising, may
reconsider whether it has been overly optimistic.
“This is not really a bad report,” says Robert Brusca of FAO Economics
in New York. “But the question we can’t answer is whether the period of
job growth is over, or is this just a one-month event.”
Viewed over the past three months, job growth is relatively strong. In
the first quarter of the year, according to the Department of Labor,
payroll employment rose by an average of 246,000 per month. In March,
the main job gains were in manufacturing, food services, and health
care. And in a trend that may help the economy, the government sector
appears to have stopped shedding jobs. Retailing, however, lost jobs.
Although the stock market was closed for Good Friday, the futures
markets reacted badly to the jobs numbers: The Standard & Poor’s
futures index was off 1.2 percent at about 10 a.m. The bond market,
which was open for a half day, saw yields fall, with the 10-year
Treasury bond dropping to 2.07 percent.
The low yield in the bond market reflects some traders’ view that the
Federal Reserve may begin another round of what it terms quantitative
easing, says Scott Brown, chief economist at Raymond James &
Associates in St. Petersburg, Fla. “It’s not likely, but it’s back on
the table,” he says.
Barclays Capital economist Michael Gapen, in an analysis, writes that
the soft jobs numbers “certainly leave the door open for further
accommodation and may shift the decision point” to June, when the Fed’s
policymakers meet.
Almost as soon as the jobs report was issued, Republicans were issuing
their press releases. In a statement, House Speaker John Boehner said,
“Today’s report shows that families and small businesses are still
struggling to get by because of President Obama’s failed economic
policies.”
The White House tried to put a more positive spin on the numbers. Alan
Krueger, chairman of the Council of Economic Advisers, in a statement
said, “There is more work to be done, but today’s employment report
provides further evidence that the economy is continuing to recover
from the worst economic downturn since the Great Depression.”
Mr. Obama, addressing on Friday a White House Forum on Women and the
Economy, mainly focused on longer-term issues facing female employment,
such as equality of pay and the paucity of women at the upper levels of
corporations.
Over the past three months, one of the strongest sectors overall has
been manufacturing. This continued in March with the sector adding
37,000 jobs. The gains in manufacturing have been led by companies
related to the auto industry, says Dan Meckstroth, chief economist at
Manufacturers Alliance for Productivity and Innovation (MAPI) in
Arlington, Va. In large part, this reflects Americans trading in their
gas-guzzling clunkers for newer, more fuel-efficient vehicles.
“Manufacturing is still recovering,” says Mr. Meckstroth. “Since the
end of the recession, we have now added back 426,000 of the 2.28
million jobs lost, or about 20 percent.” The general economy, by
comparison, has regained 3.5 million jobs out of the 8.66 million jobs
lost.
“There seems to be a more optimistic outlook about the manufacturing
sector,” he says.
Despite the slowdown in hiring in March, some economists are becoming
more optimistic about the economy, especially from mid-2013 to
mid-2014. One of those is Mark Zandi, chief economist at Moody’s
Analytics, who, in an analysis released this week, expects the economy
to grow at a 4 percent annual rate during that time.
He also expects unemployment to fall more quickly this year and next
year. And he projects that the unemployment rate will be 7 percent by
the end of 2013. By the end of 2015, he forecasts, it will fall to
under 6 percent, which the Federal Reserve considers full employment.
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