Is The Disappointing Jobs Report a Cause for Concern?

Underwhelming job-growth figures emerged Friday when the Bureau of Labor Statistics released its March report on employment. The U.S. added a net total of 120,000 jobs during the month, with all of this growth coming from the private sector, as budget constraints continue to keep a lid on government employment.

A drop-off in job growth could signal a slowing of economic momentum after several months of encouraging signs, so the question is: Does this report signal a new trend or is it simply an aberration?

Weakening growth

The new employment number is a disappointment because job growth had topped 200,000 in each of the three prior months. Another cause for concern is a loss of retail jobs in March, which may indicate something about the direction of consumer spending.

Weakness in the job market means weakness in the economy, and also has negative implications for savings account rates. A weak economy won't create the demand for capital that would encourage banks to raise deposit rates, and will also do little to make the Federal Reserve reconsider its low interest rate policies.

Employment statistics in perspective

There's no question that the drop-off in job growth is clear, but does it mean anything? A look at the history of monthly employment numbers shows that they are often wildly erratic. Sudden jumps or dips in job growth are common, especially in the early stages of an economic recovery.

What matters more are long-term trends -- streaks of a few months of low or high employment, or continued movement of the numbers upward or downward. It's too early to tell whether March's disappointing job growth means that the momentum that had appeared to be growing in recent months has truly been broken.

Reasons for nervousness

While the dip in employment growth might be a one-month aberration, the news was met with a considerable amount of concern for a couple of reasons:

A sense of deja vu is inevitable with the employment numbers starting to fall into a pattern similar to a year ago. In early 2011, employment growth topped 200,000 jobs for three straight months. Suddenly, though, job growth dropped to 54,000 in May, and didn't exceed 100,000 again until September.
Gas prices seem to have people on edge. Rising gas prices eat up money that could be used for other purchases, choke off growth by making prices generally higher, and restrain consumer spending by eroding confidence in the economy. It doesn't help that a spike in gas prices seems to have played a role in last year's sudden slowdown of growth.

Still, the key question has yet to be answered: Is this a new trend or just an aberration? April's job figures, due to be released on May 4, may tell the story.

The original article can be found at Money-Rates.com:Is the disappointing jobs report a cause for concern?