The yearlong streak of robust monthly job creation was broken on Friday with the Labor Department’s report that employers added just 126,000 workers in March, a marked slowdown in hiring that echoed earlier signs that sluggish business investment and punishing weather were exacting a toll on the economy.
Analysts blamed the plunge in oil prices as well as the pall cast by a difficult winter across the Northeast and Midwest, a combination that put a crimp on spending in the energy patch and held back consumer spending and construction.
Still, this new report presents only a limited snapshot, and many said they expected the economy to regain at least some of its momentum later this year.
“The American energy industry is adjusting very quickly to low oil prices, and we’ve seen this in the counts of the number of rigs that are active,” said Carl R. Tannenbaum, chief economist at the Northern Trust Company. “The bad news is we’re losing some jobs. The good news is, we hope, that the average consumer is saving a tremendous amount of money in lower gasoline prices.”
The unemployment rate held steady at 5.5 percent. Hourly wages, in one of the few bright spots in the report, rose 0.3 percent for private sector workers in March, after a meager 0.1 percent rise in February. But hours worked were down slightly, so overall paychecks were left essentially flat.
The slowdown in job creation reinvigorated the debate about when the Federal Reserve will raise interest rates above their near-zero level, where they have remained since 2008. Many Wall Street analysts argued that the murky jobs picture was likely to reinforce the view among the Fed’s more dovish policy makers that rates should stay put at least until the end of the summer because the economy may not be strong enough to stand on its own.
Speaking at a conference in San Francisco last week, Janet L. Yellen, the Fed’s chairwoman, warned that the recovery was fragile, despite steady progress on the jobs front. She said that the Fed would move slowly to raise rates even after it began the process of lifting short-term borrowing costs.
“For Yellen, this is an affirmation of what she did,” said Diane Swonk, chief economist at Mesirow Financial. “She said she wants to see more improvement in the labor market.”
Luke A. Tilley, chief economist at Wilmington Trust Investment Advisors, said: “For the Fed, this report decreases the probability of an interest-rate increase at the June meeting.”
Rates for government bonds dipped slightly in limited holiday trading,
In addition to the March numbers, government statisticians revised their previous estimates for January and February, subtracting 69,000 jobs from the earlier figures, leaving the monthly average for the first quarter at just under 200,000.
“It was lower than expectations, without a doubt,” said Thomas E. Perez, the secretary of labor. “But I’ve always said that one month never makes a trend.”
Mr. Perez said that if someone told him last year, when the unemployment rate was 6.6 percent, that it would now be at 5.5 percent, “I would have said that’s an April Fool’s joke.”
Last year, the drop in the nation’s output that accompanied a harsh winter was followed by an unusually strong rebound in the spring. Job growth during that cold snap was also disappointing before surging ahead the rest of the year.
After a year in which job gains averaged 269,000 a month, the sharp slowdown brought a mix of dismay and puzzlement. Justin Wolfers, a senior fellow at the Peterson Institute for International Economics and a contributor to Upshot, an online analytical section at The New York Times, posted on Twitter: “If your favorite economic commentator thinks they know what the economy is doing right now, they’re overconfident.”
Millions of Americans who have been too discouraged to look for work because of weakness in the labor market largely remained on the sidelines. The labor participation rate — which includes those who have jobs and those who are hunting — ticked down only slightly, to 62.7 percent from 62.8 percent in February.
With several presidential hopefuls poised to announce their campaigns this month, this latest report will probably help set the stage for the economic themes that candidates present to voters.
Republicans and Democrats, who have repeatedly underscored their interest in helping struggling working- and middle-class families that the recovery has left behind, may be looking at other worrisome economic signs as well.
Durable goods orders declined in February while retail sales were weak despite increases in household disposable income. The trade deficit narrowed in February — probably in part because of work stoppages at West Coast ports that limited imports — but the rising value of the dollar has put a dent in the country’s exports and is likely to mean an increase in cheaper imports from overseas.
Growth in manufacturing is also off to a slower start this year than some economists had hoped.
Friday’s disappointing figures, the weakest showing in two years, mean it will take longer for the economy to reach a level most analysts consider close to full employment.
The Hamilton Project, an economic policy initiative at the Brookings Institution, calculated that the nation still faces what it calls a “jobs gap” of four million, the number of additional jobs needed to reach prerecession employment levels.
More encouraging outlooks could be found in other quarters this week.
McDonald’s, in announcing plans to raise wages for employees at its company-owned restaurants, cited a strengthening labor market. And Walmart, the country’s largest private sector employer, already said it would raise wages to a minimum of $9 an hour by this month.
Also, the number of Americans filing for unemployment last week fell to a 15-year low. That brought the four-week moving average — a better indicator because it smooths out the normal bumps in the road — to a better-than-expected 285,500.
Housing prices have also continued their slow but steady recovery.
Particular groups of workers continue to face persistent difficulties, however.
“The unemployment rate for black communities is at a crisis level, even as the economy gets closer and closer to a full recovery,” said Valerie Wilson, an economist at the left-leaning Economic Policy Institute.
The unemployment rate for blacks is typically twice as high as the rate for whites, she said, but since the recession, that gap has increased. While white unemployment dropped to 4.5 percent in the last quarter of 2014, for example, black unemployment remained at 11 percent.
Long-term unemployment also remains a problem for older workers even as more seniors are hanging on to their jobs well into their 60s. A report issued by the AARP Policy Institute this week noted that last year, on average, 45 percent of job seekers aged 55 and older were out of work for 27 weeks or more.
The number of long-term unemployed was little changed at 2.6 million in March.
Nonetheless, Mr. Tilley of Wilmington Trust remained optimistic: “Although disappointing, we don’t think it portends a turnaround for the U.S. economy.”
Correction: April 3, 2015
An earlier version of this article misstated the labor participation rate. It edged down to 62.7 percent in March from 62.8 percent in February; it was not unchanged in March.
An earlier version of this article misstated the labor participation rate. It edged down to 62.7 percent in March from 62.8 percent in February; it was not unchanged in March.
U.S. Economy Gained 126,000 Jobs in March, an Abrupt Slowdown in Hiring
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