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March Jobs Report Haters Living Outside Reality

NEW YORK (TheStreet) -- Don't mistake Friday's stock market tumble as proof that the March jobs report is signaling the worst is yet to come.

The Labor Department reported the U.S. economy added 192,000 jobs, while the unemployment rate remained at 6.7%. Even though payrolls added came in 8,000 below what economists expected, most analysts said this was a good report.

Talk that a record cold winter derailed robust economic growth during the beginning of the year gained influential critics who wondered how long experts could blame the weather before finally realizing that maybe the economy wasn't performing all that well, regardless.

These arguments were evident after the jobs report emerged Friday.

Yet, despite Wall Street whispers of 300,000 jobs added in March, the latest report means that jobs are expanding at a clip of 187,000 over the past 12 months.

"I think this is good news; it's reasonably strong growth, it's better than we've seen in previous months and this will -- if it continues -- do a lot to help the long term unemployment rate," Peter Cappelli, professor of management at The Wharton School, said in an interview.

The long-term share of unemployment dipped to 35.8% from 37%, which is a decent decline that Federal Reserve Chair Janet Yellen says the central bank is monitoring.

Beyond that, economists and analysts are reminding market participants that weather really did slow economic growth, and data in the employment situation proves it.

"I think there's some good news in this report in the sense that this looked like kind of core jobs for the month and not a lot of the weather effects," Darrell Cronk, regional chief investment officer at Wells Fargo Private Bank, said in an interview. "There was a debate about whether the weather effect would happen in March or April, it looks to me like it might be April now."

In other words, if March didn't get the boost the more bullish analysts were looking for, then wait for April. But that shouldn't discount the fact that, minus a drop in government jobs, private sector payrolls grew by 200,000 -- a strong number by most analysts accounts. There's a possibility that strong job growth in the latter half of March was dragged down by slower growth in the first half (likely due to, you guessed it, cold weather).

Calling the March jobs report one of the most critical reports in recent months may be a fair assessment, but to say it wasn't any good ignores the subtle shift we're already witnessing.

Wells Fargo's Cronk said he is looking closely at construction, financial services and government jobs, which have struggled more than usual in the early part of the year. Cronk says he expects a regression to the mean by the end of the year, which could mean as many as 50,000 new jobs added to the economy. Construction, which grows during the spring months, jumped by 19,000, and Cronk said that may have been a bit weaker than average.

FAO Economics chief economist Robert Brusca in a note to clients pointed out parts of the March report that the Fed likely viewed as positive: long-term share of unemployment dropped, the labor force participation rate gained to reach 63.2%, marginally attached workers fell and the number of discouraged workers fell. It should be noted, however, that Brusca still doesn't think this latest jobs data means we've returned to a pre-Great Recession party.

"The real issue is that the labor force is now some 2.4 million workers larger than it was in November 2007 yet we have only created a net of 168K jobs? This is progress?" Brusca wrote.

Which leaves us about where we've been for years with these jobs reports: a slow and steady recovery. Does another miss spell disaster? Unlikely, especially when it's more than 190,000 jobs added amid a tough first quarter. But should people be expecting 300,000 or more jobs added per month? Probably not. While that may not play well when it comes to politics and midterm elections, it's reality. And the reality is that the labor force is growing, and data signals that longer-term unemployed are dropping as a proportion of the total unemployed, and participation may have bottomed.

As for the tumble in stocks, this may be a momentum trade that has nothing to do with jobs.

"I think what we're seeing is sort of a continuation of the momentum sell down, especially in technology that we saw in late March," Uri Landesman, president of Platinum Partners, said in a phone interview.

Landesman said he thinks it is possible for the S&P 500 to selloff by more than 10% over the coming months -- a move Charles Schwab has argued could occur -- but he also said he wouldn't be shocked if the index closed higher than 2,000 by the end of 2014.

That kind of uptick and a slew of other improving economic data could bode well for the labor situation.

-- Written by Joe Deaux in New York.

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