Friday's Employment Report disappointed analysts, who expected that somewhere between 203,00-209,000 jobs were created in March. Instead, only 120,000 jobs were added, according to the Bureau of Labor Statistics. This was well below both the predictions and the past months' trend: 227,000 jobs in February, and 243,000 in January. Economy-watchers were not even cheered by the drop in the unemployment rate, from 8.3% to 8.2%. Why was the report such a bummer?
Analysts had based their optimism an ADP report released earlier in the week, and forecasts by economists and businesses surveyed by Reuters and BusinessWeek. However, the largest job sector (business services) only produced 31,000 jobs -- less than half the jobs produced last month, and far less than predicted in the ADP report. Here's the job gains in other sectors:
- Temporary help -- no growth, after adding 55,000 jobs in February.
- Manufacturing -- 37,000, greater than forecast and more than last month.
- Hospitality -- 39,000, mostly in restaurants.
- Health care -- 26,000 jobs added.
- Financial services -- 15,000, mostly in credit counseling and services.
Retail continued to shed jobs, after staffing up for the record-breaking sales last fall. Stores let go of 33,800 workers, after releasing 28,600 in February. The jobs picture wasn't helped by a 7,000 job loss in temporary services, which had been a stalwart throughout the recession. Businesses usually hire part-time and temporary workers in the beginning stages of a recovery, before deciding to put full-time workers back on the payroll. As expected, government and construction also lost a few thousand jobs. (Source: BLS, Employment Situation Summary, April 6, 2012Bloomberg, Company Payrolls in U.S. Grow by 209,000 Workers, April 4, 2012; )
What This Means for You
An addition 120,000 jobs per month is less than the 150,000 jobs needed to keep unemployment from worsening. So why did the unemployment rate get better? Because workers left the labor force. Some left because they had given up looking for work, while others simply retired, went back to school, or left to become unpaid caregivers for children or other family members.
Just to put things in perspective, it's far better than August of last year, when absolutely no new jobs were added. (To compare to other months, see Employment Statistics). Second, this report is revised a month later, after the BLS gets new data. In fact, February's Employment Report showed that 240,000 were added -- more than the 227,000 originally estimated. For that reason, don't react like analysts and buy/sell your investments based on each month's report. Remember, the trend is your friend, and the trend is still modestly strong.
However, to the millions of people still looking for a job, and even more who haven't yet re-entered the labor force, the economy needs to grow faster than last quarter's 3% rate to quickly reabsorb them. The longer people have been without a job, the more likelihood there is of creating structural unemployment. That's when job skills become outdated, no longer matching those needed by employers. This hits older workers harder because they are less likely to go back to school for retraining.
Fortunately, the House of Representatives and the Senate passed the JOBS Act. This legislation is expected to create an additional 7 million jobs and create new job training opportunities. If you are unemployed, here's more help from other About.com Guides:
- Top 10 Fastest Growing Jobs With a High School Diploma or GED, by the About.com Guide to Careers, Dawn Rosenberg McKay.
- If you're over 50, get Free Job Training and Placement for Older Workers.
- Alison Doyle, the About.com Guide to Job Searching, has a wealth of resources -- start with Prepare for a Job Search.
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