WASHINGTON -- Employers added 126,000 jobs in March, snapping a 12-month streak of gains above 200,000, the Labor Department said in its monthly report Friday.
The nation's unemployment rate in March remained at 5.5 percent. The unemployment rate in Arkansas in February -- the most recent measurement -- was also 5.5 percent.
Economists noted that for months hiring had been stronger than other gauges of the economy, suggesting that a pullback in job gains was inevitable. The number of hires in March was the fewest since December 2013.
"Job growth has been running at a stupendous pace in America over the last several months, increasingly out of tune with other economic indicators, which have pointed to a slowdown," James Marple, senior economist at TD Economics, wrote in a research note. "The reckoning in March closes at least some of this gap."
At the same time, some said last month's data look bleak in part because hiring had been so robust in the months that preceded it.
"Employers aren't laying people off," said Patrick O'Keefe, director of economic research at the accounting and consulting firm CohnReznick. "What they've decided to do is slow down the pace at which they're hiring until they have more confidence."
Rough winter weather, tepid overseas markets and a slowdown in energy-related capital investment combined to sting the economy in March.
Friday's jobs report seems to be "corroborating that the U.S. definitely hit a soft patch in the first quarter," said Omair Sharif, rates sales strategist at Newedge USA LLC in New York.
"Hiring just took a breather in the month of March. I wouldn't read this as anything other than that. We should get back on track in the second quarter," he said.
U.S. government bond yields fell and the dollar dipped Friday after the jobs report was released. The yield on the 10-year Treasury note fell to 1.84 percent. That was down from 1.91 percent late Thursday. U.S. stock markets were closed in observance of Good Friday.
In a holiday-shortened trading session, the U.S. bond market wrapped up at noon Eastern time. Major European stock markets were closed, while Asian markets finished mostly higher.
Last month, the manufacturing, building and government sectors all shed workers. Factories cut 1,000 jobs, snapping a 19-month hiring streak. Construction jobs also fell by 1,000, the first drop in 15 months. Hiring at restaurants plunged from February. The mining and logging sector, which includes oil drilling, lost 11,000.
Some other categories showed continued gains. Health care added 22,000 workers. Professional and business services -- a sector that includes lawyers, engineers, accountants and office temps -- gained 40,000. Financial services expanded by 8,000, and retailers maintained their 12-month pace by adding 25,900.
In addition to reporting sluggish hiring for March, the government revised down its estimate of job gains in February and January by a combined 69,000.
Wage growth in March remained modest. Average hourly wages rose 7 cents to $24.86 an hour. That marked a year-over-year pay increase of 2.1 percent. But because average hours worked fell in March for the first time in 15 months, Americans earned less on average than they did in February. Tepid pay increases have been a drag on the economy since the recession ended nearly six years ago.
Many Americans remain out of the labor force, partly because many baby boomers are reaching retirement age. The percentage of Americans who are either working or looking for work fell in March to 62.7 percent, tying the lowest such rate since 1978.
Job growth had been healthy for more than a year before March. Yet the streak of strong hiring, along with cheaper gasoline, hasn't led to a significant increase in consumer spending.
Last month's subpar job growth could make the Federal Reserve less likely to start raising interest rates from record lows in June, as some have been anticipating. The Fed may decide that the economy still needs the benefit of low borrowing costs to generate healthy growth, analysts said.
The Fed signaled last month that it would be cautious in raising rates from record lows. The Fed has yet to rule out a rate increase in June. But many analysts expect the first increase no earlier than September. In part, that's because Fed officials have revised down the range of unemployment they view as consistent with a healthy economy to 5 percent to 5.2 percent, and from 5.2 percent to 5.5 percent previously.
"I think [June] is completely off the table," said Carl Tannenbaum, chief economist at the financial services company Northern Trust.
The Fed likely won't raise rates until it sees evidence of consistently solid growth, analysts said.
"This single report will not necessarily result in the Fed changing tack on its view of policy tightening this year," Millan Mulraine, a research strategist at TD Securities USA in New York, wrote in a note after the report. "What it will do is weaken the argument for a midyear hike and it will place a greater premium on the next few employment reports as the Fed looks for evidence that the relapse in economic growth and labor market momentum is temporary."
Cheaper oil has led energy companies to cancel some contracts and halt orders for pipelines and equipment, hurting manufacturers. At the same time, the strengthening dollar has made American-made goods costlier abroad, cutting into exports.
This year's job growth has yet to ignite a larger boom in consumer spending. McDonald's, Wal-Mart, the Gap and other major employers have announced raises for their lowest-paid employees. But those pay raises are staggered and unlikely to fuel faster wage growth.
The economy has disproportionately added lower-paying jobs in the retail and restaurant sectors since the economic recovery began in mid-2009. Adding jobs in the lowest-paid industries can suppress average hourly wages, even when employers are rewarding cashiers, waiters and sales clerks with pay bumps.
The falling overall unemployment rate also obscures persistent difficulties facing particular groups of workers.
"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. Median hourly wages for black workers have dropped by 3.6 percent since the start of the recession, falling twice as much as for whites.
Long-term unemployment remains a problem for older workers. A report issued by the AARP Policy Institute this week noted that last year, on average, 45 percent of job seekers age 55 and older were out of work for 27 weeks or more.
Information for this article was contributed by Josh Boak and Paul Wiseman of The Associated Press; by Shobhana Chandra, Jenna Smialek and Jeff Kearns of Bloomberg News; and by Patricia Cohen of The New York Times.
Business on 04/04/2015