Part of the drop is attributed to seasonal variations in the data. February’s results may have been overly strong, resulting in a pullback the next month. But economists will also be hunting for any effects of the across-the-board federal spending cuts known as the sequester. The declining number of government employees has weighed down job growth for the past five months.
In addition, several other economic indicators this week have clocked in below expectations. The ADP National Employment Report estimates that 158,000 jobs were added in March, significantly lower than predicted. And the number of people filing for new unemployment benefits rose to 385,000 during the last week of March.
“The job market continues to improve — but in fits and starts,” said Mark Zandi, chief economist of Moody’s Analytics, which calculates the ADP data.
The recovery gained momentum during the winter, with job growth topping 200,000 for several months. But similar wintertime surges in the past two years went on to dissipate by the summer, and some economists worry that the trend will repeat this year.
A Gallup report released Thursday showed that the percentage of Americans holding full-time jobs has remained essentially unchanged over the past year. Gallup chief economist Dennis Jacobe said the recent spate of job growth has done little more than keep pace with population growth.
“If you’re out there looking for a job, the dismal situation is no better now than it was a year ago,” he said.
Some businesses have cited the uncertainty and cost of government regulation as key factors that are holding back hiring. About 15 percent of small and medium-sized businesses surveyed by PNC said they planned to bring on full-time workers in the next six months, down from 28 percent during the same period last year. Lack of demand was the primary reason, followed by government regulation, according to the report released Thursday.
“Small and medium-sized businesses have really been through the wringer,” said Gus Faucher, senior macroeconomist at PNC. “They’re still being quite cautious.”
Still, there are glimmers of life in the economy. The rebound in the real estate market has helped rebuild the equity many Americans have in their homes. That is not only helping consumers feel more comfortable spending money, but it’s also spurring new hiring in construction. Major stock market indexes hit record highs last month, and Americans’ retirement accounts have reached new levels as well.
If the pace of economic recovery continues, the Federal Reserve could start dialing back its massive stimulus program as soon as this summer. But another mid-year slump could change the game.
“I don’t want to be complacent,” Chicago Fed President Charles L. Evans said Thursday during a panel discussion at the University of Dayton, according to Bloomberg. “I want to make sure I have enough confidence in the improvement in the labor market outlook.”