Unexpected drop in U.S. unemployment
US unemployment dropped unexpectedly to 8.2 percent in March, the lowest rate in more than three years, despite a mixed picture on hiring and apparent weakness in the retail sector.
Despite the positive headline number, the Labor Department reported that the number of unemployed workers hovered close to 13 million and hiring slowed, a warning sign that the recovery may be in trouble.
The economy created a meager 120,000 jobs in March, much lower than the 200,000 forecast by economists, who were left scratching their heads over the impact the unseasonably warm winter had on the statistics and other anomalies.
Chief among them was the spectacular collapse of hiring in the retail sector, which did not seem to tally with strong sales and spending reported in the sector.
Retail trade employment fell by 34,000 in March, with most of the losses coming from large merchandise stores.
That contrasted sharply with Americans’ reporting they spent nearly 20 percent more in shops, restaurants, online and at petrol stations last month, according to a report from the Gallup polling organization.
Perceptions that the economy has turned a corner will be hurt by the latest figures, so too President Barack Obama’s hopes of approaching the November election buoyed by a strong recovery.
Unemployment remains high by US standards and Obama remains vulnerable to rising gasoline prices and an external shock that would slow the recovery.
This time last year the economy had also appeared on track, but a failure by Obama and his Republican foes to reach a deal to cut spiraling US debt caused a slump in confidence.
Economists had expected the US unemployment rate to stay unchanged at 8.3 percent, and the economy to create some 200,000 jobs.
“Today’s US employment report for March was less positive than recent reports — and much weaker than had been expected.” said Jason Schenker, president of Prestige Economics.
“Since many stock and commodity markets are closed today, the impact of this report is likely to be seen and felt on Monday,” he added.