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This morning, investors received some disconcerting news on the U.S. economy when the Department of Labor released its report on employment and unemployment for the month of March at 8:30 (EST). Specifically, the report showed that the nation’s nonfarm payrolls increased by just 120,000 last month—the consensus expectation was for the creation of more than 200,000 jobs.  Too, the report showed that the payrolls count for January and February was revised to show just 4,000 more jobs created than previously reported.

The latest government employment data was disappointing, as 200,000, or more, monthly new additions are typically viewed as the rate needed to make a dent in the nation’s unemployment rate. The jobless rate, which is more of a lagging indicator, fell from 8.3% to 8.2% last month.

In the prior three months, payroll employment had risen by an average of 246,000 per month. Private-sector employment grew by 121,000 in March, including gains in manufacturing, food services, and health care, while government employment fell by 1,000.

A breakdown of the components showed that manufacturing employment rose by 37,000 in March, while retail trade employment decreased by 34,000. The latter figure is worrisome as the services sector accounts for roughly two-thirds of the nation’s economic output. This development should not come as a total shock, as the Institute for Supply Management’s report on manufacturing activity for March, released earlier this week, was stronger than the trade group’s companion report on non-manufacturing (i.e., services) activity.

All in all, the latest report on employment and unemployment could be considered a setback for the U.S. economy and particularly the labor market. It could also have an adverse effect on trading when it resumes on Monday—the U.S. equity market is closed today in observance of Good Friday. This report on labor conditions may also force the Federal Reserve to reconsider its stance on further monetary policy support. On Tuesday, minutes from the lead bank’s latest monetary policy meeting had suggested that the Fed was not considering such a move at this time.