In March 120,00 new jobs were added to the economy, sharply missing earlier estimates in the range of 200,000 t0 215,000.
Surprisingly, the unemployment level fell slightly lower to 8.2% from 8.3% but many economists attribute the small decline to unemployed Americans ceasing to look for jobs in the economy and therefore not being counted in the overall unemployment survey.
The disappointing March jobs report will lead to new questions and debate about the sustainability of U.S. jobs growth for the remainder of 2012, a presidential election year.
During the previous three months, the number of jobs added to the U.S. economy were all above 200,000 although the number of jobs added for January was just revised lower by 9,000 while February’s jobs number was revised higher by 13,000.
Some economists believe that the impressive jobs numbers over the first three months in 2012 can be explained by seasonal factors such as the unseasonably warm winter weather that allowed contractors and businesses to hire more workers and begin working at an earlier period of time in the year.
Still the March jobs report showed that other sectors such as retail experienced a pullback in hiring. In March 34,000 retail jobs were shed from the U.S. economy. On the positive side, there were 37,000 manufacturing jobs added. Most manufacturing jobs are not low scale jobs and pay well above minimum wage.
More time is needed to assess whether the disappointing March jobs number is a one time blip in the positive historic jobs trend or the start of a new weaker pattern with jobs growth.
Fed Chairman Ben Bernanke expressed some concerns in earlier meetings about the pace of growth and job hiring in the U.S. economy for the 2nd quarter of 2012 after experiencing a robust 1st quarter.
Economists are mostly divided in their opinions about whether the weak jobs report for March is the precursor of more disappointing U.S. jobs data in the weeks ahead.
Some investors who are disappointed by the wide variance in the jobs reports from the first three months of 2012 compared to the weaker jobs created in March are expecting the Fed to engage in more quantitative easing (QE3) to help revive the recovery.
However, it is unlikely that the Fed will move towards further easing measures simply based upon a weak jobs report from only one month.
It is also unlikely that the Federal Reserve will enact more quantitative easing before the expiration of Operation Twist in June.
The possibility for more quantitative easing measures will accelerate if there are more disappointing jobs reports down the road combined with further signs of deterioration in the U.S. and global economies.
The release of more economic data during the weeks ahead will tip the scale in one clear direction.
The Federal Reserve will meet again on April 24th and 25th.
The ramifications of weaker job growth in the U.S. during the next several months will hold great weight for the upcoming presidential election in November.
President Obama said that he welcomed the news from the March jobs report but later admitted that there is still a lot more work to do.
“Our economy has not created more than 4 million private sector jobs over the past 2 years and more than 600,000 in the past 3 months alone. But it’s clear to every American that there will be ups and downs along the way, and that we have got a lot more work to do” Obama reported.
Republican presidential candidate Mitt Romney used the weak March jobs report to highlight that President Obama’s policies are causing Americans to pay a high price.
“Millions of Americans are paying a high price for President Obama’s economic policies. It is increasingly clear the Obama economy is not working, and that after three years in office, the president’s excuses have run out” Romney said.
Economists and investors will pay close attention to U.S. corporate earnings that will be unveiled this week.
Economic data from China with their inflation level and GDP will also be closely followed this week to determine whether the Chinese economy is heading for a hard landing.
The likelihood for the Chinese government to lower their interest rates will gain traction if their economic data proves to be weaker than expected.