Job growth slowed markedly in March from the prior month, the government said Friday in a report that was certain to disappoint analysts and increase concerns that the economy could be heading for another springtime slump.

Employers added just 88,000 net new jobs last month, the lowest since June and down from an upwardly revised 268,000 in February.


The nation’s unemployment rate last month dipped a notch to a new four-year low of 7.6%, but for the wrong reason. It dropped because the labor force, those working and looking for jobs, fell by nearly a half-million people. In fact, the share of working-age Americans participating in the labor force declined to a new three-decade low of 63.3%.

The job-growth number came in well below analysts’ forecasts that on average called for about 190,000 new jobs and the unemployment rate to hold steady.


Among the positive signs in Friday’s report from the Labor Department, the construction industry hired more workers in a reflection of the housing market recovery. Healthcare firms and restaurants continued to bulk up, and accounting businesses also added a solid number of workers.

Overall, workers’ average weekly hours rose slightly as the large pool of part-time workers wanting full-time work shrank. And like the February job numbers, the January payroll data were revised higher, to 148,000.


But much of the report was not encouraging, especially after February’s strong job growth and other signs that economic growth may be gaining momentum. Last month, retailers shed 24,000 positions, manufacturing payrolls were down slightly and the federal government lost 14,000 jobs, most of them at the Postal Service.

Over the last 12 months, the economy has created 169,000 jobs a month on average. The weak March number is all the more concerning because some job cuts are expected from the federal spending reductions under the so-called sequestration.


“March’s discouraging job growth underscores the continuing volatility and fragility of the economy,” said Christine Owens, executive director of the National Employment Law Project, a worker advocacy group.

What’s more, after Friday’s report was released, analysts immediately brought up the specter of a repeat of the last three years in which job growth slowed sharply late in the spring and summer.


In the past, global economic shocks in Europe, Asia and the Middle East contributed to the drop-off in confidence and hiring. While the global outlook looks better today, many are concerned that the sequester, plus higher payroll taxes earlier in the year, will cut into what has been a pickup in U.S. economic activity from increased home-building and solid business and consumer spending in recent months.