NEW YORK (CNN/Money) -
Employers added far fewer jobs in March than the previous month, as a much anticipated government report Friday came in well below Wall Street forecasts.
The Labor Department reported a net gain of 110,000 jobs to U.S. payrolls in the month, down from the revised 243,000 in February. That was only half of the hiring forecast by economists surveyed by Briefing.com, whose average estimate was 220,000.
Despite the disappointing payroll number, the unemployment rate fell to 5.2 percent from 5.4 percent in February. That marked the lowest unemployment rate since September 2001, the month of the Sept. 11 terrorist attack. Forecasts had been for the unemployment rate to edge down to 5.3 percent.
The unemployment rate is generated by a separate survey of households, which showed a drop in the number of people unemployed last month. But the survey is considered far less reliable by most economists.
The report marked the eighth time in the last 10 months that payroll growth has come in well below forecasts by most economists. It also is less than the 150,000 gain in employment seen as necessary to keep pace with population growth.
The news sent Treasury prices higher, lowering the yield on the 10-year note to 4.44 percent from 4.48 percent late Thursday.
That's because investors were betting the Federal Reserve would not have to raise interest rates more aggressively to combat inflation. Stocks also rose in early trading, as investors welcomed job growth that was not too cold and not too hot for Wall Street.
Average hourly wages rose about 0.3 percent to $15.95 an hour -- a bit faster than the 0.2 percent rise forecast by economists. Average weekly wages also climbed 0.3 percent to $537.52. Both measures had risen just 0.1 percent in February.
Those wage numbers and the drop in the unemployment rate could suggest that employees may be gaining some long-absent leverage in seeking raises. While a good news for paychecks, that could be a concern for the Fed, said Anthony Chan, senior economist with JPMorgan Asset Management.
"The average hourly earnings figures were truly the spoiler of this report," said Chan. "It tells us that the Fed may now have to start becoming more vigilant about upcoming price pressures."
But Rich Yamarone, director of economic research at Argus Research, said the report pretty much assures that the Fed will stay on its pace of quarter-point rate hikes, rather than hiking rates by a half-percentage point at an upcoming meeting.
"Wages are starting to pick up, but they are still not at a threatening level," he said. "The economy has hit an oil-induced soft patch. This is as good as it's going to get for a while. You can't expect monthly increases of 200,000 to 300,000 jobs."
Chan agreed that overall the report suggests mostly sluggish job growth ahead.
"This report at the very least does tell us that the employment picture may have hit a temporary bump in the road. I have to believe we may not be breaking toward 200,000 (new payroll jobs a month) anytime soon," he said.
But Chan added that payroll growth may improve later in the year as companies increase capital spending.
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