A weak employment report Friday knocked the stock market down a peg or two, but even with the dip, market indices remained higher than they had ever been before last month.
Matthew Yanni, of Yanni and Associates Investment Advisors of Franklin Park, said he was taking advantage of the decline to pick up some equities in a market that he believes was overreacting to the news.
Admittedly, the monthly jobs report from the U.S. Bureau of Labor Statistics did not contain good news, even though the headline number sounded encouraging: The unemployment rate fell in March to 7.6 percent from 7.7 percent in February, the lowest the unemployment rate has been since 2008.
But the statistics underlying the report disappointed investors. The private sector created just 95,000 jobs, and that net gain was whittled down to 88,000 jobs by losses in the government sector. The jobs added in March were a far cry from the results for the two previous months, which were revised upward by a combined 61,000 jobs to 148,000 new jobs for January and 268,000 for February.
The employment report was issued at 8:30 a.m., and the Dow Jones industrial average dropped by 168 points from the previous close within two minutes of the opening bell an hour later.
By the end of the day, stocks had recovered most of their morning losses. The Dow ended down 40.86 or 0.28 percent to close at 14,565.25. Standard & Poor's 500 Index closed down 0.43 percent or 6.70 points at 1,553.28, and the Nasdaq closed at 3,203.86, down 0.65 percent or 21.12 points.
Mr. Yanni acknowledged the report was disappointing but he noted those results reflected just one month and previous months had been revised upward. "I don't think it is the start of a long-term trend," he said.
A falling unemployment rate was clearly the red herring of the report. "The unemployment rate is not currently providing an accurate picture of labor market strength," said Heidi Shierholz, an economist with the Economic Policy Institute in Washington, D.C.
She noted the rate was lower because people have been dropping out of the labor force.
The number of people working fell nationally by 206,000 even as the number of unemployed fell by 290,000. Those two statistics reflected that the civilian labor force had shriveled by nearly half a million people.
Labor force participation rate was 63.3 percent in March, its lowest level since 1979, during the Carter administration.
Ms. Shierholz said the low labor force participation rate is not because of demographic factors such as retiring baby boomers, but because of lack of demand for workers. If the 4 million people the Congressional Budget Office estimates dropped out of the labor force had been looking for work, the unemployment rate would be 9.8 percent, she said.
The White House's statement on the employment report from Alan B. Krueger, chairman of the Council of Economic Advisors, said the March report was the first survey to look at the employment situation since the beginning of the sequestration. The automated federal budget cuts have reduced spending in numerous areas nationally since the beginning of March. The across-the-board cuts were triggered as a result of ongoing budget battles in Washington, D.C.
Mr. Krueger said the Congressional Budget Office has estimated the sequester will reduce employment by 750,000 full-time equivalent jobs by the end of the year. "Now is not the time for Washington to impose more self-inflicted wounds on the economy," he said.
The federal government cut 14,000 jobs in March, 11,700 in the U.S. Postal Service. State governments added 9,000 jobs and local governments cut 2,000 jobs in the public schools.
The separate survey of employers showed mixed results for the month.
While manufacturing suffered a net loss of 3,000 jobs, 4,000 jobs were added producing durable goods, including 800 jobs manufacturing cars. Food manufacturing and clothing took the biggest hits as food makers cut 1,600 jobs while textile and apparel companies cut a combined 4,100 jobs.
The construction industry added 18,000 jobs. Retail trade cut 24,100 jobs with 15,300 jobs lost at clothing stores. Health care providers added 23,400 new workers. And temporary services, which are often seen as a harbinger of future hiring, added 20,300 jobs.
Ann Belser: email@example.com or 412-263-1699.