Small drop in US jobless to 8.2 per cent

US unemployment dropped to 8.2 per cent in March, the lowest rate in more than three years, the labour department said.

However, the number of unemployed workers remained hovering close to 13 million, with a slow down in hiring, a warning sign that the recovery may be in trouble.

The economy created a meagre 120,000 jobs in March, much lower than the 200,000 forecast by economists.

There was a spectacular collapse of hiring in the retail sector, which did not seem to tally with strong sales and spending reported in the sector.

Retail trade employment fell by 34,000 in March, with most of the losses coming from large merchandise stores.

That contrasted sharply with Americans’ reporting they spent nearly 20 per cent more in shops, restaurants, online and at petrol stations last month, according to a report from the Gallup polling organisation.

‘Door open’

The release of Friday’s figures keeps open the option for the central bank to inject more money into the ailing economy.

Economists, however, said it was too soon to despair as the data did not signal a trend towards poor employment growth prospects.

“Given that the report reflects only one month of data and some of the underlying cyclical sectors registered payroll gains, we do not view it as conclusively signaling a shift to a lower trend rate of employment growth,” said Michael Gapen, a senior economist at Barclays in New York.

“The soft employment numbers certainly leave the door open for further accommodation and may shift the decision point to the June meeting as the Fed continues to monitor the incoming data.”

US stocks slipped on the disappointing data, with S&P 500 stock index futures shedding 1.2 per cent. The New York Stock Exchange is closed for the Good Friday holiday.

Republican White House hopeful Mitt Romney seized on the latest employment figures, warning President Barack Obama that his “excuses have run out”.

“This is a weak and very troubling jobs report that shows the employment market remains stagnant,” Romney said in a statement.

‘A lot more to do’

Speaking at an economic forum for women at the White House on Friday, Obama hailed the percentage fall but said more still had to be done to create new jobs.

“Right now no issue is more important that restoring economic security for all our families in the wake of the greatest economic crisis since the Great Depression,” said Obama.

“That begins with making sure everyone who wants a job has one. So we welcome today’s news – that business has created another 121,000 jobs.

“Our economy has now created four million private sector jobs over the past two years. More than 600,000 jobs in the past three months alone.

“But 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.”

Unemployment remains high by US standards and Obama remains vulnerable to rising petrol prices and an external shock that would slow the recovery.

This time last year the economy had also appeared on track, but a ongoing failure by Obama and his Republican foes to reach a deal to cut spiraling US debt caused a slump in confidence.