By Russ Grote, (202) 822-1205, rgrote@hamiltonps.com

Read our cheat sheetᅠ here.

The March payroll report gives us very little to celebrate. The economy added only 120,000 jobs in March, 80,000 below expectations. Surprisingly in the household survey, the overall number of jobs actually fell by 31,000. And while the unemployment rate dipped to 8.2 percent, this was only due to a drop in labor force participation. The March payroll report adds to the toppling evidence that the current recovery is fragile and will up the pressure on the Federal Reserve to take action.

One explanation for the disappointing swing in jobs may be a result of weather-related affects on the January and February numbers as we noted earlier this week. Seasonal adjustments may have inflated in prior months due to warm weather boosting job creation in seasonally sensitive sectors. The construction and retail industries, two sectors very sensitive to weather patterns, lost over 40,000 jobs collectively in March.

However, just as the previous two months may not have been as strong as we thought, the current disappointing numbers may not be as weak. Every month from June 2011 to January 2012 has seen the initial BLS jobs numbers revised upward in the end. And February’s first revision was also revised upward by 13,000.

Despite a weak report, the threshold for getting the unemployment rate below 8 percent by Election Day may have actually become easier for President Obama with yet another decline in the labor force participation rate. If the participation rate stays at 63.8 percent, the President only needs 176,000 jobs per month to get below 8 percent unemployment. However, if the participation rate slowly rises back to trend, a moderate recovery will simply not be enough, as the President will need 276,000 jobs per month to get below 8 percent by Election Day.

For the Fed, this report confirms suspicions that the labor market is “far from normal.” And while on balance, the March jobs report may not make Fed action more likely; it certainly makes calls for further Fed action such as QE3 more likely.

Russ Grote is an analyst at Hamilton Place Strategies.ᅠ Prior to joining HPS, Russ conducted field research on the economic development in the EU. ᅠHe holds a BA from the University of North Carolina at Chapel Hill.