Connect to share and comment

U.S. job market recovery not on firm footing


The slight downtick in unemployment rate in March was no good news for recovery of the American job market, as the lackluster monthly job gains and the large number of dropouts from jobs seeking signaled that U.S. economic growth was losing steam.


The U.S. unemployment rate edged down to 7.6 percent in March from 7.7 percent in February, with job creation growing at a meager pace, according to a report released by the U.S. Labor Department Friday.

Total non-farm payroll employment increased by 88,000 in March, with the private sector creating 95,000 jobs last month, or the 37th straight month with jobs increases in the sector. The job gains in March, however, was only about half of the previous 12 months when an average of 169,000 jobs were created each month.

The construction sector increased 18,000 jobs in March, boosted by the improving housing market, while professional and business services gained 51,000 jobs in the same month. The manufacturing industry shed 3,000 jobs and the retail trade sector lost 24,100 jobs in March following eight months of jobs growth.

The latest jobs report was a "big negative surprise and underscored the fact that a robust jobs recovery, even now, has not yet solidified," said Heidi Shierholz, an economist with the Washington-based think tank Economic Policy Institute.

Even the average monthly jobs growth speed of 168,000 in the first quarter of the year is not even close to what the country needs and "at that rate we would not get back to the pre-recession unemployment rate until late 2019," Shierholz explained.


The number of the unemployed Americans totaled 11.7 million in March, down from 12 million in February, but that is mainly because more people stopped looking for jobs due to the still grim labor market outlook, a common challenge confronted by many developed countries.

Friday's report also showed that the U.S. participation rate, a barometer of the active portion of an economy's labor force, slid to 63.3 percent in March from 63.5 percent in February. It has fallen by a steady clip from nearly 66 percent at the start of 2009 to the current low level, reflecting a large number of job seekers have dropped out of the labor market in the past four years.

The decline in unemployment rate is due to people dropping out of the labor force market. And the weak labor force participation is not caused by demographic factors like retiring baby boomers, but mainly driven by a lack of demand for workers that is keeping them from working or seeking work, Shierholz contended.


The March jobs report was the first reading into the nation's labor market since the 85 billion U.S. dollars of government spending cuts took effect starting on March 1, the so-called "sequester" or "sequestration" in U.S. government budget language.

The latest report is a reminder of the impact of sequestration on U.S. labor market recovery. U.S. governments at all levels shed 7,000 jobs last month against the backdrop of the across-the-board federal spending cuts. Despite 7,000 job gains from state and local governments last month, the federal government slashed 14, 000 jobs.

While the recovery was gaining traction before the sequestration became effective, these "arbitrary and unnecessary" cuts to government services will be a headwind in the months to come, and will cut key investments in the nation's future competitiveness, said Alan Krueger, Chairman of the White House Council of Economic Advisers, in a blog article after the release of the widely-scrutinized jobs data.

The U.S. Congressional Budget Office (CBO) has predicted that the sequestration could cost the nation about 750,000 jobs in this year alone.

The fiscal consolidation is a "major challenge" for U.S. economy. The sequestration is probably done in a way "maximizing the pains and damages to the economy while minimizing the benefits we will get," as the cuts were disproportionately concentrated on discretionary spending including scientific research and infrastructure outlays, said David Stockton, a senior fellow at the Peterson Institute for International Economics (PIIE).

"Now is not the time for Washington to impose more self- inflicted wounds on the economy. The Administration continues to urge Congress to replace the sequester with balanced deficit reduction, while working to put in place measures to put more Americans back to work like rebuilding our roads and bridges and promoting American manufacturing," Krueger suggested.