The poor US labor market report for March is probably only part of a temporary downturn in the economy, a senior Federal Reserve official said Monday.
Friday's report showing only about half the number of jobs expected, as well as other weaker data, have been a surprise, said William Dudley, the president of the New York branch of the Federal Reserve.
The data confirmed that economic growth in the first quarter was "quite weak," he said in a speech in Newark, New Jersey, with gross domestic product expanding at an annual pace of just 1 percent.
However, he said, "I view these downside surprises as reflecting temporary factors to a significant degree."
It was the first comment from a Fed official since the disappointing March jobs report was released Friday, with analysts expecting the poor data could convince the Fed to postpone an interest rate hike that had been expected as early as June.
Dudley blamed in part the particularly harsh winter which analysis suggested had real negative impact on economic indicators from retail sales to housing construction.
The Labor Department reported that the economy generated only 126,000 net new jobs in March, compared to an average of 287,000 each month for the preceding 12 months.
Dudley stressed that, after having kept the benchmark federal funds rate at zero since the end of 2008 to help rebuild the recession-shocked economy, the Fed needed to be sure that the economy was strong enough to handle "normalizing" monetary policy with the first rate hikes this year.
"The timing of normalization will be data dependent and remains uncertain because the future evolution of the economy cannot be fully anticipated," he said, according to the text of his speech.
"It will be important to monitor developments to determine whether the softness in the March labor market report evident on Friday foreshadows a more substantial slowing in the labor market than I currently anticipate."