Economy
9:12 am
Fri April 6, 2012

Jobless Rate Slips; Fewer New Jobs Than Expected

Transcript

STEVE INSKEEP, HOST:

It's MORNING EDITION from NPR News. Good morning. I'm Steve Inskeep.

Let's talk about the surprisingly weak jobs report that came out from the Labor Department today. The numbers for March show just 120,000 new jobs were added to U.S. payrolls. That's considered a disappointment, even though the unemployment rate did decline slightly, to 8.2 percent.

NPR's John Ydstie is here to talk with us about what all this means. Hi, John.

JOHN YDSTIE, BYLINE: Hi, Steve.

INSKEEP: Okay, headline numbers, one at a time. First, the number of jobs created. The prediction, you were telling us earlier today, was for more like 200,000 jobs in the month of March.

YDSTIE: Yeah, and it was much less than that. And the most likely thing is that the warmer than normal winter weather means that December and January and February actually stole some jobs from March. For instance, the weather might have made it possible for some construction workers to have a job who wouldn't have. It may have added to traffic at retailers, so workers were added there. So you have big job growth in those months, close to 250,000 added during each month, during December, January and February. That means the normal hiring that you might have had in March in those industries wasn't there. Also playing a role, I think, is government seasonal adjustments to this data which were distorted by the warm weather. So we got this low 120,000 number.

INSKEEP: So hard to sustain quite the same momentum that there had been in recent months. Nevertheless, the unemployment rate went down again. What does that mean?

YDSTIE: Well, you know, it's a little counterintuitive, isn't it. But you've got to remember that the two headline numbers that come in this report come from two different surveys. The job growth number comes from a survey of businesses. The number of – the number for the unemployment rate comes from a survey of households.

And they occasionally give a mixed message, though they normally converge over time. And when you look at why the unemployment rate actually fell in March, it's not because of big job gains in the household survey. Rather, it's because there was decline in the number of people in the workforce.

INSKEEP: Eight point two percent is the number of people who don't have a job who are seeking a job actively, is what you're saying.

YDSTIE: That's right. And what we've seen is there was a decline of a number of people in the workforce, likely discouraged workers, and when you see people leaving the workforce, that tends to bring the unemployment rate down.

INSKEEP: Let me ask about some of the trends within the trends here. Manufacturing has been pretty strong in hiring in recent months. What about in March?

YDSTIE: Well, we had another good month in March. Manufacturing employment rose by 37,000, with especially big gains in motor vehicles and parts. And over the past two years, factory employment has risen nearly half a million. There were also strong gains in restaurants and bars. Health care continued to add jobs, but not as rapidly as in February.

INSKEEP: OK. Restaurants and bars up. I'm told retailers went down, a net loss of 34,000 jobs. I guess this raises the question, John Ydstie – with the Federal Reserve and other economic policy-makers, what they want to do at this point, given the status of the economy with the latest numbers.

YDSTIE: Yeah, well, I think we've heard – we thought in the last week or so that the possibility the Fed would stimulate the economy more was being taken off the table. I think this report and the disappointment that comes with 120,000 jobs puts back on the table the possibility that the Fed will go in to stimulate the economy.

On the other hand, you know, average job growth for the past four months has been steady – 215,000 jobs, if you average it. And since the low point two years ago, 3.5 million – more than 3.5 million jobs have been created. It's much slower than people would like. There are still close to 13 million people out of work, but the economy seems to be gaining its footing.

INSKEEP: OK. And again, the headline numbers here – employment, net employment rose by 120,000 jobs in March, according to the Labor Department, less than had been expected. The unemployment rate did drop, though, 1/10 of a percent to 8.2 percent.

John Ydstie, thanks very much.

YDSTIE: You're welcome, Steve. Transcript provided by NPR, Copyright NPR.