Updated from 2:48 p.m. ESTThe Federal Reserve left interest rates on hold Tuesday but tweaked its policy statement to reflect the central bank's nagging concerns about the weak labor market. While the statement was almost identical to the one issued in late January, policy officials sounded less bullish on the job market than they had six weeks ago. "Although job losses have slowed, new hiring has lagged," the central bank said. In its last statement, the Fed said hiring remains subdued but "other indicators suggest an improvement in the labor market." The Fed also noted that output is expanding "at a solid pace," not "briskly" as it had said in January. While subtle, the change in language is likely to reinforce the view that interest rates will remain on hold for some time. "I would say the whole statement is very slightly more dovish than the previous statement," said Drew Matus, an economist at Lehman Brothers. The Fed's edict in January led many analysts to believe that policymakers were focusing on other measures of employment besides the monthly nonfarm payrolls. While payrolls have generally been disappointing, the unemployment rate has fallen. Meanwhile, jobless claims have been under 400,000 for many weeks and layoffs as reported by Challenger Gray & Christmas have declined. "This brings people back to reality. The Fed is focused on the payroll survey," Matus said. "While the Manpower survey might be nice and the drop in claims might be nice, what they really want to see is hiring and they're not seeing that." Manpower's latest survey said the job market in the second quarter should be the best in 2 1/2 years. Matus said he isn't expecting a rate hike until the first quarter of 2005. Some economists had expected the Fed to fine-tune its language Tuesday, but they thought any changes would be hawkish. "If Fed officials opt to make changes, they are likely to continue their recent evolution in the direction of sounding progressively less worried about further disinflation and less committed to keeping the funds rate as low as 1%," noted UBS Investment Research economist Maury Harris.