The economy seems to be losing momentum as job growth slows dramatically at the end of the first quarter.
The addition of 120,000 private sector jobs are only half of the 240,000 jobs added in February, a disappointment after three consecutive months of positive gains over 200,000. And while the unemployment rate dipped slightly by .1 percent, the slowdown in temporary hires and retail job losses show cracks in what many thought to be robust growth.
“This is not a ‘Good Friday’ with respect to the labor market,” says Ken Mayland, President of ClearView Economics in Ohio.
Retail jobs fell by 34,000 in the month of March despite a 0.8 percent gain in consumer spending in February – the biggest increase in seven months – and a rise in consumer confidence to 76.2 points – the highest it’s been in a year.
Increased productivity in retail may be to blame for the decrease in jobs as more companies adopt cost cutting measures.
“There’s new computer technology that aids the retailer and works toward reducing the headcount and of course there’s all the Internet retailing – that’s the new model as opposed to the brick and mortar model,” says Mayland.
The decrease could also be an organic slow-down from record annual sales of $4.7 trillion in 2011 – an eight percent increase over 2010 and the largest increase since 1999.
“Retail was a lot of the big job losers and that’s not surprising because we had record sales last year so it doesn’t surprise me that retail is shedding those jobs [now],” says Kimberly Amadeo, the About.com U.S. Economy Guide.
Either way – it’s a blow to the market which also saw temporary hiring – generally a precursor to permanent hiring – taper off as well.
Continued growth in manufacturing and auto sales, however, seem to indicate that positive – albeit slow – growth will continue. Manufacturing gained 37,000 jobs – with a sizeable share of those jobs – about 1,200 – in auto part production while auto sales were up 13 percent in March.
“Automobile sector will continue to grow and each month has been higher than forecast and that translates into increased employment pretty rapidly,” says Howard Chernick, an economics professor at City University of New York’s Hunter College.
Though, on the whole, the numbers were disappointing, overall job and economic growth is still improving, with job gains from February being revised up.
“I always say that that the trend is your friend and the trend is still up,” says Amadeo.
Losses in retail and temporary hiring may just be hiccups in an otherwise sustainable recovery.
Adam Personnel, a New York staffing and recruitment firm, has had sustained demand for temporary staff according to Catherine Palmiere, president of the company, who also says that she doesn’t anticipate a significant slowdown any time soon.
Rebecca Flach, spokesperson for the Retail Council of New York State also cautioned against interpreting the slip in retail jobs as an ominous warning that the recovery has shifted into reverse.
“I don’t think it’s anything to be worried about at this stage, one month isn’t a basis for what’s going on with the recovery and economy,” she says.
Housing, however, continues to be a point of concern, as home values steadily decline and more housing stock floods the market. Historically a healthy housing market is a crucial components of a speedy and comprehensive recovery.
“I don’t see housing snapping back the way it has before and we’re still paying for this enormous bubble … and it’s a mistake that’s punishing the economy and will continue to do so for many months and maybe a year or so,” says Professor Chernick.
Home values dropped 3.8 percent across 20 cities, between January 2011 and January 2012 according to the Standard and Poor’s Case-Schiller Home Price Indices.