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Don't Be Dismayed by March's Disappointing Job Growth

April 12, 2013

Job growth slowed in March as the economy created only 88,000 jobs, which was well below the expected gain of 190,000 according to Bloomberg.
-Kate Warne, investment strategist, Edward Jones

Job growth slowed in March as the economy created only 88,000 jobs, which was well below the expected gain of 190,000 according to Bloomberg. The unemployment rate dropped to 7.6% from 7.7%, but that's because fewer workers were in the overall labor force. Not surprisingly, after rising to new record highs in March and early April, stocks fell in response.

March's employment report was disappointing, but job growth has always been uneven from one month to the next. A three-month average provides a better indication of the trend. In the first three months of 2013, the economy created 504,000 jobs, up slightly from the 468,000 average over the past three quarters.

While we'd like to see greater improvement, we expect more of the same going forward. Job creation and the economy have both been modest but resilient chugging along in the right direction, but not at the pace everyone would like.

Another Spring Slowdown?
Over the past few years, rapid growth and rising markets at the beginning of the year have softened during the spring and summer. March's employment report could be an early sign of slower economic growth and more volatile markets through the middle of the year. But no one knows for sure. So don't change your long-term investment strategy in response to forecasts of a possible short-term slowdown.

In past years with spring slowdowns, the economy and stock market have rebounded toward the end of the year. While we can't predict what will happen this time, we'd suggest using any pullback to add quality stocks at lower prices if appropriate. In our view, quality stocks are attractively valued with good long-term growth prospects.*

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