U.S. employers increased their payrolls by 88,000 last month, compared with 268,000 in February, according to a Labor Department report released Friday. It was the slowest pace of growth since June, and less than half of what economists had expected.

It also was the start of a third-consecutive spring in which employers have tapered off their hiring, even after the Labor Department adjusted the numbers for the usual seasonal changes. Slowdowns in the previous two years could be attributed to flare-ups in the European debt crisis, but this time the cause is unclear. The recent payroll-tax increase or political gridlock in Washington could be to blame for the sudden slowdown, but neither seems to be showing up much in other relevant economic data.

“I’m at a bit of loss as to how to explain it,” said Paul Dales, senior U.S. economist at Capital Economics. “Even if this is the start of another springtime-summertime slowdown, we’re hoping it’ll be a bit more modest than it was in previous years, because the housing market is doing very well.”

The unemployment rate, which comes from a different survey, ticked down to 7.6 percent in March, from 7.7 percent.

“Most American companies are still lean and mean,” said Ethan Harris, co-head of global economics research at Bank of America Corp. in New York. “They’ve been very disciplined about controlling their work force, their spending and investment. This is really a story about the fiscal austerity hitting an otherwise improving economy and delaying what should be an improvement in growth.”

The share of the working-age population in the labor force, known as the labor force participation rate, fell to 63.3 percent, the lowest since May 1979. The average number of hours worked for all employees increased in March, while earnings stagnated.

As the participation rate declines, it takes smaller gains in the number of employed to push down the unemployment rate. In March, the number of unemployed Americans fell to 11.7 million, the fewest since December 2008.

Economists cautioned not to draw too many conclusions from one month’s report, because the numbers will inevitably be revised.

“Remember that we’ve had a pattern of upward revisions,” said John Ryding, the chief economist at RDQ Economics, noting that the government on Friday revised January and February’s net growth upward by 61,000 jobs. “Before we read too much into it, bear in mind we have at least two more cracks of the whip before the number is really finalized.”

March’s job gains were concentrated in professional and business services and health care, while the government again shed workers, as it has been doing for most of the past four years, though reductions at the Postal Service accounted for most of the latest decline. Economists expect more government layoffs in the months ahead as the effects of Congress’ across the-board budget cuts make their way through the system.

“This is not a good report through and through,” Dan Greenhaus, chief economic strategist at brokerage firm BTIG, said in a note to clients.

March’s job gain was less than half the average of 196,000 jobs in the previous six months. Some economists say weak hiring may persist into summer before rebounding by fall.

Stocks plummeted after the report but then narrowed their losses later in the day. The Dow Jones industrial average closed down about 41 points. Broader indexes also declined.

The job market slowed progress just as $85 billion in automatic across-the-board government budget cuts, known as sequestration, started March 1. The reductions in planned spending - which began because Congress couldn’t compromise on a debt-reduction strategy - trim 5 percent from domestic agencies and 8 percent for the Defense Department this fiscal year.

“Sequestration is going to have an adverse effect” on the economy, Alan Krueger, chairman of the White House Council of Economic Advisers, said on Bloomberg Television. “That’s one of the head winds we’re facing.”

He cited a Congressional Budget Office estimate that the enforced budget cuts will reduce employment by 750,000 by the end of the year.

Rising home prices and near-record-level stock prices are making consumers feel wealthier. Construction firms also have added 169,000 jobs in the past six months as home building has accelerated.

“The recovery is on much better footing this year than in the last few springs, and the recovery in the housing market will do much to support growth,” said Sophia Koropeckyj, an economist at Moody’s Analytics.

Sluggish job growth could embolden the Federal Reserve to keep borrowing costs low for the long run. The Fed has said it plans to keep short term interest rates at record lows at least until unemployment falls to 6.5 percent - and Chairman Ben Bernanke has said a 6.5 percent rate is a threshold, not a “trigger,” for any rate increase. The Fed wants to see sustained improvement in the job market.

Several industries cut back sharply on hiring, according to Friday’s report. Retailers cut 24,000 jobs, manufacturers 3,000 jobs.

Some economists said retailers might have held back on hiring in part because March was colder than normal. That likely meant that Americans bought fewer spring clothes and less garden equipment.

The oil and gas industry has been adding jobs fast over the past several years but cut jobs in March for the first time in 2½ years. Oil drilling and exploration is booming, but low natural-gas prices over the past year have made natural-gas drilling in some areas unprofitable.

In March, average hourly pay rose a penny, the smallest gain in five months. Average pay is just 1.8 percent higher than a year earlier, trailing the pace of inflation, which rose 2 percent in the past 12 months.Information for this article was contributed by Catherine Rampell of The New York Times; by Christopher S. Rugaber and Paul Wiseman of The Associated Press; and by Alex Kowalski of Bloomberg News.

Front Section, Pages 1 on 04/06/2013