(MENAFN- The Peninsula) US employers added the fewest number of jobs in more than a year in March, the latest sign of weakness in the economy and one likely to further delay an anticipated interest rate increase by the Federal Reserve.
Nonfarm payrolls rose 126,000 last month, less than half February's pace and the smallest gain since December 2013, the Labor Department said.
The weakness was concentrated in the goods-producing sector, which has been hurt by a strong dollar and lower crude oil prices. Leisure and hospitality also saw a sharp slowdown in jobs growth, suggesting harsh winter weather could have dragged on hiring. While the jobless rate held at a more than 6-1/2-year low of 5.5 percent, the workforce shrank. The labor force participation rate returned to a more than 36-year low reached late last year.
"The report confirms the emerging narrative of slowing growth momentum seen in the other economic indicators. It will weaken the argument for a mid-year (rate) hike," said Millan Mulraine, deputy chief economist at TD Securities in New York.
The tepid increase in payrolls ended 12 straight months of job gains above 200,000 - the longest streak since 1994. In addition, data for January and February were revised to show 69,000 fewer jobs created than previously reported, giving the report an even weaker tone.
After its robust stretch, the jobs figures now appear more in line with other signals from consumer spending to housing starts and manufacturing that have suggested the economy grew at a sub-1 percent annual rate in the first quarter. Economists had forecast that payrolls would rise 245,000 last month.
Prices for US government debt rallied as investors pushed back their expectations for a Fed rate hike, while US stock index futures fell about 1 percent. The dollar dropped against a basket of currencies.
The US central bank has kept overnight interest rates near zero since December 2008, but a number of officials have said an increase will likely be considered at its June policy-setting meeting. While economic growth is expected to rebound, it appears increasingly unlikely the Fed will have sufficient signs of strength in hand by then.
"Now the timing for the lift-off could be delayed to September or even to December. The June date is not off the table, however, assuming the economy and employment rebound," said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo.
The buoyant dollar and lower oil prices have combined to crimp the profits of some large companies, forcing a reduction in capital spending.
Equipment maker Caterpillar Inc has warned that lower oil prices will hurt its business in 2015, and Procter & Gamble, the world's largest household products maker, has cautioned that the dollar would hit its profits.
The dollar has gained about 13 percent against the currencies of the main U.S. trading partners since last June. Economists say the impact is equivalent to a half-point interest rate hike.
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