American hiring increases for March turned out to be incredibly disappointing, falling behind even the most pessimistic forecasts. This has created strong doubt about the strength of economic expansion.
The report on payrolls on Friday, April 6th, showed an increase of 120,000 payrolls; this is the smallest growth in 5 months. The data released also indicated an unemployment drop to 8.2 percent due to potential employees leaving the workforce. Workers were putting less hours in as well. Payrolls in February rose by a 240,000 revised.
The released figures were comparatively low to the 246,000 average increase in the past 3 months. This helped to highlight Federal Reserve Chairman, Ben Bernanke’s concern the stronger economic growth is needed in order to improve the labor market. Friday’s report showed a drop in earnings per week, this will negatively affect consumer spending while Americans are paying more and more at the gas station.
“Not welcome news,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “The economy needs a lot of momentum to get through the latest headwind of the return of $4 gasoline, and this report is distinctly on the slow side.”
There have been countless stories of individuals who have been under or un-employed since 2008. This adds fuel to the problematic fire of unemployment. Many people have been out of the labor market for so long at this point that they have given up searching altogether.
“We see modest growth inside the U.S. and demand for labor,” Carl Camden, president and chief executive officer of Kelly Services Inc.
S&P futures that expire in June fell by 1.1 percent to 1,374.90 on Friday. U.S. Stock exchanges were closed due to Good Friday. The dollar dropped by 1 percent against the yen and 0.2 percent against the euro.
Employment in the retail sector
The data contained in Fridays report revealed a fall of 34,000 jobs in the retail sector. This is the biggest drop since October 2009. It is believed that a milder winter may have caused a higher rate of hiring at the expense of March’s hiring rate.
Temperatures during December through February were averaging 36.8 degrees Fahrenheit (2.7 degrees Celsius), this was 3.9 degrees warmer than the average temperatures throughout the 20th century. This fourth warmest on record for the continental United States.
Jack Kleinhenz, chief economist of the National Retail Federation said “We had mild weather, which basically had consumers in the marketplace earlier.” As a result, retailers postponed headcount reductions that typically follow the holiday shopping season, he said. In addition to this, J.C. Penny Co., the fourth largest department store chain in the U.S., claimed that they will be firing 1,000 workers which will be a part of their restructuring plan.
Employment in the service sector
Employment form service sectors contributed to 89,000 of the 210,000 jobs created in March.Professional and business jobs contributed 31,000 jobs. In contrast there was also a drop of 7,500 jobs relating to temporary hiring.
Politics and Employment
Due to the break of positive results in employment gains, Presidential Republican contender, Mitt Romney, criticized Barack Obama, blaming him and his economic policies for these problems:
Millions of Americans are paying a high price for President Obama’s economic policies, and more and more people are growing so discouraged that they are dropping out of the labor force altogether.
Obama replied to the criticism with:
We welcome” the added jobs and the decline in the unemployment rate. The economy’s created more than 4 million private sector jobs in the past two years, more than 600,000 in the past three months.
Employment in the manufacturing sector
Manufacturing data was one of the few sects that added jobs to the U.S. economy in March. An increase of 37,000 jobs was seen in March. A totals of 148,000 jobs have been added in the last four months. Sustained automobile purchases have encouraged increases in employment. This has led to increases in employment in various auto companies such as Ford.
Economic Improvement Numbers
“We cannot yet be sure that the recent pace of improvement in the labor market will be sustained” Bernanke said. He also added that he was especially concerned about the unemployed who have been out of a job for more 6 months or more.
Friday’s report revealed a lessening of long-term unemployed. The number of people who have been unemployed of 27 weeks or more went down from 42.6 percent of all unemployed to 42.5 percent.
Average earnings per week fell from $807.56 to $806.96. The average hours worked per week also fell from 34.6 to 34.5 hours.
The “underemployment rate” fell from 14.9 percent to 14.5 percent.