3 Reasons Not to Panic About the March Jobs Report

Despite hand-wringing over slowing job growth, the recovery still looks solid.

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Underwhelming, disappointing and mediocre. Call it what you will, but the 120,000 jobs added in March is indubitably not a reason to cheer. The figure came in well below expectations, not to mention well below the average of 246,000 jobs added in each of the previous three months.

Given the rocky recovery, it may be easy to see sputtering job growth as a reason to fear the worst. Here are a few reasons to fret a little less about the slowdown.

The Unemployment Rate Is Still Falling

No, not just the drop in headline unemployment, which fell from 8.3 percent to 8.2 percent from February to March. In fact, this decline, aside from being small, is also due in part to the labor force shrinking slightly to 154.7 million, a 164,000-person drop. That's because the unemployment rate is calculated as a percentage of the total labor force, not the total population.

More meaningful, however, may be the change in the U-6 unemployment rate, which takes into account the unemployed population, plus discouraged workers, people employed part-time for economic reasons, and other marginally attached workers—those who want a job and searched for one in the last 12 months, but are not currently in the labor force. This rate fell from 14.9 percent to 14.5 percent in March, a substantial drop. U-6 unemployment has come down considerably from its recent peak of 17.2 percent in October 2009. And another strong improvement now—even while the headline numbers disappoint—suggests that the labor market is still improving on a deeper level.

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Sunscreen in February

In terms of raw, unadjusted jobs numbers, March normally sees a jump in job growth, as warmer weather makes for more hiring. But when the nation experiences one of its warmest winters on record, it can throw off the usual seasonal hiring pattern.

"The unusually warm winter likely shifted some hiring into the first two months of the year and wreaked havoc with the seasonal factor; therefore, the 212,000 average monthly gain recorded over the first three months of 2012 paint a more accurate picture of the labor market." says Sophia Koropeckyj, managing director at Moody's Analytics, in an analysis of the figures. "This is solid growth that will slowly absorb the unemployed and attract new workers into the labor market."

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It's Just One Month

"While the report was disappointing, it is also a reminder that the data are extremely volatile," says Joel Naroff, president and chief economist at Naroff Economic Advisors, in a commentary on the figures. "Thus, we shouldn't obsess over any one monthly change, whether it is good or bad."

A longer trend of disappointing hiring would be much more worrisome, and that doesn't currently look likely. Various other indicators do not suggest a slipping recovery: jobless claims continue to decline and Americans have been spending more, which has certainly greased the wheels of the economy. Koropeckyj also points to solid consumer confidence, as well as a decline in planned layoffs.

"Weaker than expected March gains should not cause alarm since a number of other measures provide corroborating evidence of a slowly improving labor market," she says.

Twitter: @titonka