US economy adds 88K jobs, rate drops to 7.6 percent
Published 12:00 am Friday, April 5, 2013
WASHINGTON (AP) — U.S. employers added just 88,000 jobs in March, the fewest in nine months and a sharp retreat after a period of strong hiring. The slowdown may signal that the economy is heading into a weak spring.
The Labor Department said Friday that the unemployment rate dipped to 7.6 percent from 7.7 percent, the lowest in four years. But the rate fell last month only because more people stopped looking for work. People who are out of work are no longer counted as unemployed once they stop looking for a job.
The percentage of Americans working or looking for jobs fell to 63.3 percent in March, the lowest such figure in nearly 34 years.
Stock futures fell after the jobs report was released.
March’s job gains were half the pace of the previous six months, when the economy added an average of 196,000 jobs a month. The government said hiring was even stronger in the previous two months than previously estimated. February’s job gains were revised to 268,000, up from 236,000. January job growth was raised to 148,000, up from 119,000.
Several industries cut back sharply on hiring in March. Retailers cut 24,000 jobs after averaging 32,000 in the previous three months. Manufacturers cut 3,000 jobs after adding 19,000 the previous month. Financial services shed 2,000.
Economists say the decline in the work force reflects several trends: many of those out of work become discouraged and give up on their job hunts. And as the population ages, more people are retiring.
Most economists think the economy strengthened from January through March, helped by the pickup in hiring, a sustained recovery in housing and a more resilient consumer. Consumers stepped up purchases in February and January, even after Social Security taxes increased this year.
Still the higher taxes have reduced paychecks. And many economists say steep government spending cuts that began taking effect March 1 will slow growth in the spring and summer.
Mark Vitner, an economist at Wells Fargo Securities, thinks the economy expanded at a 3.2 percent annual rate in the first quarter. But he forecasts that growth will slow to a 2 percent annual pace in the current second quarter, and then rebound after the impact of the government spending cuts fades.
Economists expect the spending reductions will shave half a percentage point off economic growth this year. Many federal workers will experience pay cuts. And government contractors will likely cut jobs. That could also drag down overall monthly hiring.