US jobless rate down to 8.2% despite fall in job creation

Employers in the US added fewer jobs than forecast in March, underscoring Federal Reserve chairman Ben Bernanke’s concern that recent rises may not be sustained without a pick-up in growth.

The 120,000 increase in payrolls, the fewest in five months, followed a revised 240,000 gain in February that was bigger than first estimated, according to labour department figures that were released yesterday in Washington.

The March increase was less than the most pessimistic forecasts in a Bloomberg News survey, in which the median estimate called for a 205,000 rise.

Unemployment fell to 8.2%, the lowest since Jan 2009, from 8.3%.

Faster employment growth that leads to bigger wage gains is necessary to propel the consumer spending that accounts for about 70% of the economy.

The data also demonstrated that Americans worked fewer hours and earned less on average per week, helping to explain why Federal Reserve policy-makers say that interest rates may need to be kept low at least through late 2014.

“We see a lack of sustainability in terms of strong job growth,” said Tony Crescenzi, a strategist at Pacific Investment Management in Newport Beach, California. “This is still not strong enough to create escape velocity, which is to say an economy strong enough to make it on its own without additional monetary stimulus from the Federal Reserve.”

Stock-index futures declined after the figures, with the contract on the Standard & Poor’s 500 Index expiring in June falling on the back of poorer than expected figures. The yield on the benchmark 10-year Treasury note fell to 2.08% from 2.18%.

Payroll estimates from 80 economists ranged from increases of $175,000 to $250,000 after an initially estimated $227,000 rise the previous month.

Revisions added a total of 4,000 jobs to payrolls in January and February.

Bloomberg