The unemployment rate ticked downward to 7.6 percent in March, its lowest rate since December 2008. Yet that's not necessarily great news. The latest jobs report from the Labor Department shows that employers added 88,000 jobs in March, the Labor Department reported Friday. That's well below consensus expectations of 193,000, according to Bloomberg, and is also a significant slowdown from February's 268,000.
That's not to say that the report was altogether a disappointment. The report did show some job growth, however, in both January and February. January's nonfarm payrolls figure was revised upward from 119,000 to 148,000, and February's jobs figure was revised up from 236,000 to 268,000. That's a combined 61,000 more jobs than previously estimated.
The strongest job growth last month came from professional and business services, a broad category that includes workers such as architects and lawyers, which added 51,000 jobs. Health care and social assistance, a category that has been strong throughout the recovery, added nearly 28,000 jobs.
Construction also continued to grow, adding 18,000 jobs. Construction job growth is viewed as a barometer of the health of the housing market. Meanwhile, retail lost over 24,000 jobs, the government shed 7,000 jobs, and manufacturing subtracted 3,000 jobs.
The declines in retail jobs may suggest that Americans have pulled back on their spending, forcing retailers to make cuts. Public sector employment has also been a notable weak spot in the job market over much of the recovery, as governments at every level have dealt with lower tax revenues and have cut their spending.
But why the decline in the jobless rate when employers added so few jobs? That's due to a decline in a measure called the labor force participation rate. The unemployment rate counts the number of people who are jobless and actively looking for a job as a share of the total labor force – the population of people who either have a job or are seeking one.
That means that if lots of people get fed up with the job search and stop looking – a sure sign of problems in the job market – the jobless rate also falls. The labor force participation rate is currently at 63.3 percent, down 0.2 percentage points from February and 0.5 points from one year ago.
Sequestration has also been a big buzzword in discussions of jobs numbers; the Congressional Budget Office has estimated that the automatic spending cuts that went into effect on March 1 could mean 750,000 fewer jobs this year. However, sequestration's effects likely did not show up in the March report, says Conrad DeQuadros, senior economist at research firm RDQ Economics.
Economists differ on what those effects will eventually look like, but DeQuadros believes that the effects will be minimal, meaning reduced hours and furloughs – not layoffs – for most workers.
Altogether, he believes that job growth will stick closer to 200,000 per month for the rest of the year. That would bring about welcome improvements in the job market and unemployment rate, though in the broader context of the recession's effects, it's slow growth.
"We really need to see employment growth stronger than that to bring the unemployment rate down quickly. It's still very elevated," he says.
Another expert agrees that the job market will only see moderate improvement throughout 2013.
"For the remainder of this year, assuming no external shocks the first half of the year, we will see sustained increases in nonfarm employment of around 200 to 225,000," says Patrick O'Keefe, director of economic research at CohnReznick.
"But I think it's important to emphasize that those numbers suggest that we are going from a crawl to a jog. And there's no anticipation that the labor market will begin to sprint anytime soon."