Disappointing Jobs Report Revives Talk of Fed Easing

March’s disappointing jobs report shows the reversal of warm weather hiring, but also some troubling trends that are already sparking talk of more Federal Reserve easing.

The 120,000 nonfarm payrolls added in March were well below the 203,000 expected, but the unemployment rate fell to 8.2 percent from 8.3 percent.

February’s payrolls growth was revised higher to 240,000 from 227,000, but the January jobs number was revised lower by 9,000 to 275,000.

In March, manufacturers added 37,000 jobs, while jobs in the construction industry fell by 7,000 and temporary workers, an important barometer, dropped by 7,500.

“It’s in part a payback for warm weather. You see that in the construction and retail side. The labor force dropped, and that’s why the unemployment rate went down. Here, in a strong economy, you’re supposed to be encouraged by people coming back to the labor force because they’re expecting to get jobs,” said David Ader, chief Treasury strategist at CRT Capital.

After the 8:30 a.m. ET report, buyers rushed into the bond market, driving yields lower in a holiday-shortened session. The 10-year was yielding 2.07 percent, off from its session high yield of 2.225 percent.

“We’re tweaking the data, so have the odds just gone more in favor of (Fed) easing? Absolutely,” said Ader.