Weak job report the latest sign economy is slowing

A rack with forms to assist the unemployed and job seekers is seen at a New York State Department of Labor career center in Albany, N.Y. The government says new claims for unemployment benefits reached their highest level in 26 years last week, as companies cut workers at a rapid pace. (Mike Groll/AP Photo, File)

The U.S. Department of Labor's weaker-than-expected jobs report today fed fears the economy is slowing. Thet gain of just 88,000 jobs for March, down by more than half from January and February, sent stock prices lower, with the Standard & Poor's 500 big-company stock index down 1 percent in early trading.

But the weak jobs report shouldn't have surprised investors, since the economy has already been facing higher labor costs, weak durable-goods demand and slow factory orders, factory analyst John Baliotti told clients at Philadelphia-based Janney Capital Market this morning. Employers have little need to hire, he noted.

There'll be no boom this year, but factory orders and investment are up, even if factory hiring isn't, according to Wells Fargo's economists.

To be sure, the housing market keeps strengthening, which "argues against a slowdown," wrote James M. Meyer, chief investment officer at $1 billion-asset Tower Bridge Advisors, in a report to clients of brokerage Boenning & Scattergood. But higher Social Security payroll taxes, a drop in government war spending and the across-the-board federal "sequester" program cuts that follow Congress' failure to agree on more targeted deficit reduction all threaten consumer spending -- even as small businesses are being careful to "keep their headcount below the magic 50 number" if they want to avoid having to pay medical benefits under next year's "Obamacare" rule, Meyer added.

The day before the number came out, PNC Financial Services Group, the biggest bank based in Pennsylvania, said its new survey of small and midsized businss owners shows most "plan to delay hiring new employees" or borrowing to expand. Companies blamed "continued uncertainty about federal spending, tax and deficit actions; hiring freezes and ongoing layoffs" by the U.S. Government and other large employers; and weak export demand from Europe.

Also, in a sign of pending inflation, six times as many employers told PNC they plan to raise prices, compared to the ones who said they are likely to cut prices this year.

What do employers want? Industrial companies "need improvements to the [transportation] infrastructure, as well as a friendlier regulatory environment," before factories will resume adding American jobs, said Mark Podob, vice president at Metlab, a Wyndmoor company that finishes parts for Navy ships.

Corporate layoffs have been rising since last fall economist Joel Naroff wrote, citing data from the employment firm Challenger, Gray and Christmas. The federal "sequestration is also beginning to hit home," Naroff added. "The poltiical-economic insanity in Washington has put some real roadblocks in the way of growth."