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US unemployment rate slips, but job creation slows

Rick Bowmer / AP

Job seekers standing line during the Career Expo job fair, in Portland, Ore. Employers pulled back sharply on hiring last month, a reminder that the U.S. economy may not be growing fast enough to sustain robust job growth.

The nation's unemployment rate dipped slightly in March, but the economy's job-creating engine slowed, raising concerns about the strength of the recovery.

The Labor Department reported Friday that the economy generated 120,000 jobs last March, well below the 203,000 expected and breaking a streak of robust job reports since the beginning of the year. The unemployment rate fell to 8.2 percent from 8.3 percent in February.

A fourth successive month of healthy employment gains would have helped President Barack Obama who faces re-election in November. 
Even though job growth has been more than 200,000 per month since December and the unemployment rate has fallen from 9.1 percent in August, it remains a little above the level when Obama took office.

"It is clear to every American that there will still be ups and downs along the way and that we've got a lot more work to do," Obama said at a White House event Friday.

Obama's most likely Republican opponent now, Mitt Romney, had a slightly different take on the data “This is a weak and very troubling jobs report that shows the employment market remains stagnant," he said in a statement on his campaign's website.

The economy has lost about 5.3 million jobs since the start of the 2007-09 recession. At the recent pace of growth, those jobs will not be recouped before early 2014.

The painfully slow recovery in the labor market is a concern for Federal Reserve Chairman Ben Bernanke who is keeping open the option of further monetary policy support for the economy if the unemployment rate remains stubbornly high.

The weak employment growth last month likely reflected the fading boost from unseasonably warm winter weather. The payrolls count for January and February was revised to show just 4,000 more jobs created than previously reported.

"Overall, it is disappointing if you think that the economy was strongly picking up. Probably January and February overstated the labor market growth, while March understated it. I think that numbers will be better in the coming months," economist Nigel Gault of IHS Global Insight told Reuters.  

The drop in the unemployment rate, to the lowest level since January 2009, reflected a drop in the labor force. The separate household survey, from which the jobless rate is derived also showed a drop in employment.

The private sector added 121,000 new positions in March, while government employment edged down 1,000.

Manufacturing enjoyed another month of strong job gains, with factories adding 37,000 new positions, helped by carmakers trying to meet pent-up demand for motor vehicles. Factory jobs increased by 31,000 in February.

Construction hiring fell 7,000, the second straight monthly decline. In the huge service sector, gains were in healthcare, professional and business services categories. Temporary help fell 7,500 after rising 54,900 in February.

Despite the weak employment gains last month, average hourly earnings rose 5 cents.

The workweek dipped to 34.5 hours from 34.6 hours in February.

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Jobless rate's drop creates conundrum for economists

Reuters contributed to this report.

The Daily Rundown's Chuck Todd is joined by Moody's Mark Zandi to share their analysis of the low number of jobs added during March.

The unemployment rate drops to 8.2 percent after the March unemployment report showed US employers added 120,000 jobs for the month. A CNBC panel discusses the data.