July 24, 2017

Hiring in U.S. Tapers Off as Economy Fails to Gain Speed

American employers increased their payrolls by 88,000 last month, compared with 268,000 in February, according to a Labor Department report released Friday. It was the slowest pace of growth since last June, and less than half of what economists had expected.

It also was the start of a third consecutive spring in which employers have tapered off their hiring, even after the Labor Department adjusted the numbers for the usual seasonal changes. Slowdowns in the previous two years could be attributed to flare-ups in the European debt crisis, but this time the cause is unclear. The recent payroll tax increase or political gridlock in Washington could be to blame for the sudden slowdown, but neither seems to be showing up much in other relevant economic data.

“I’m at a bit of loss as to how to explain it,” said Paul Dales, senior United States economist at Capital Economics. “Even if this is the start of another springtime-summertime slowdown, we’re hoping it’ll be a bit more modest than it was in previous years, because the housing market is doing very well.”

The unemployment rate, which comes from a different survey, ticked down to 7.6 percent in March, from 7.7 percent, but for an unwelcome reason: more people dropped out of the labor force, rather than more got jobs.

The labor force participation rate has not been this low — 63.3 percent — since 1979, a time when women were less likely to be working. Baby boomer retirements may account for part of the slide, but discouragement about job prospects in a mediocre economy still seems to be playing a large role, economists say.

“The drop in the participation rate has been centered on younger workers,” said Joshua Shapiro, chief economist at MFR Inc., “many of whom have given up hope of finding a decent job and are instead continuing in school and racking up enormous amounts of student debt, which has contributed to the recent surge in consumer credit outstanding.”

Stock market indexes were down in Friday afternoon trading.

Still, as always, economists cautioned not to draw too many conclusions from one month’s report, because the numbers will inevitably be revised.

“Remember that we’ve had a pattern of upward revisions,” said John Ryding, the chief economist at RDQ Economics, noting that the government on Friday revised January and February’s net growth upward by a total of 61,000 jobs. “Before we read too much into it, bear in mind we have at least two more cracks of the whip before the number is really finalized.”

March’s job gains were concentrated in professional and business services and health care, while the government again shed workers, as it has been doing for most of the last four years, though reductions at the Postal Service accounted for most of the latest decline. Economists expect more government layoffs in the months ahead as the effects of Congress’s across-the-board budget cuts make their way through the system.

Some policy makers have started to publicly address deficiencies in the quality of the jobs being created by the private sector, in addition to their quantity.

“It’s important to look at the types of jobs that are being created because those jobs will directly affect the fortunes and challenges of households and neighborhoods as well as the course of the recovery,” Sarah Bloom Raskin, a member of the Federal Reserve Board, said in a recent speech.

Relatively low-wage sectors like food services and retail businesses have accounted for a large share of the job growth in the last few years; a report in August from the National Employment Law Project, a liberal advocacy group, found that a majority of jobs lost during the downturn were in the middle range of wages, while a majority of those added during the recovery have been low-paying.

In March, in fact, jobs in food services and drinking places accounted for the largest share of total American employment on record. Today nearly one in 13 American jobs is in this industry.

Ms. Raskin also expressed concern about temporary jobs, which account for a growing share of total employment.

Usually an increase in temp hiring is considered a good thing, at least at the start of a recovery, because it indicates that employers are thinking about taking on permanent workers. So far, though, employers seem to be sticking with those temporary contracts.

“Temporary help is rapidly approaching a new record,” said Diane Swonk, chief economist at Mesirow Financial, who noted that there was also a rapid increase in temp hiring during the boom years of the 1990s. “That of course means more flexibility for employers, and less job security for workers.”

Article source: http://www.nytimes.com/2013/04/06/business/economy/us-adds-only-88000-jobs-jobless-rate-falls-to-7-6.html?partner=rss&emc=rss

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