WASHINGTON - Mainstream economists had expected the report to show between 180,000 to 200,000 new jobs to have been created last month, but the Labor Department said employment increased by just 88,000 jobs nationwide.
The worse-than-expected numbers, coming off a February when 236,000 jobs were created, sparked an early selloff on Wall Street, with the Dow Jones Industrial Average dropping 145 points, or 1 percent, in the first 90 minutes of trading. But prices recovered during a day of volatile trading to close down only modestly. The Dow finished off 40.86 points to close at 14,565.25, the S&P 500 was off 6.70 points to end at 1,553.28, and the Nasdaq dropped 21.12 points to finish at 3203.86.
Over the past 12 months, hiring had averaged 169,000 new jobs per month - February's strong number was also revised upward - so the weak March statistic suggested to some a very rapid slowdown that eclipsed a slight decline in the unemployment rate, 0.1 of a percentage point, to 7.6 percent.
Mark Zandi, chief economist for forecaster Moody's Analytics, said the job market faces still more challenges in the months ahead, citing both government budget cuts and the impact of health care legislation.
"The weak March job gain presages weaker job gains this spring and summer," he said. "Fallout from the (budget) sequester has yet to hit and adjustment to health care reform by small businesses will weigh on jobs for much of the year."
That's likely to be the case, even allowing for the impact in March of unusually cold weather, Zandi said.
Not everyone was worried by the poor monthly showing, however. Neil Dutta, head of economic research for Renaissance Macro Research in New York, cautioned that recoveries don't move in a straight line.
"From 2004 to 2006, when the labor recovery hit its stride in the last expansion, private employment registered a monthly gain of sub-100,000 a total of 11 times. So, roughly one-third of the time in the last labor market recovery, private employment came in below 100,000," Dutta said.
But many others found the report from the Bureau of Labor Statistics jarring.
"This is an extremely troubling labor market report, given how strongly stocks have rallied, and how much expectations have been lifted with optimism around the consumer and housing," said Scott Anderson, chief economist for Bank of the West in San Francisco.