Leading indicators in the Labor Department's March employment report, released Friday, suggest that the U.S. economic recovery may have run out of gas, David A. Rosenberg, chief economist and strategist at Gluskin Sheff & Associates Inc., said in a note.

The Labor Department said only 120,000 jobs were added in March, the smallest gain since October. Economists surveyed by Reuters had expected 203,000 jobs.

The unemployment rate did drop to a three-year low of 8.2 percent, but the decrease in unemployment missed economists' predictions and stemmed largely from the fact that more and more Americans have given up finding a job.

Three leading indicators in the March employment report bode poorly for the future, Rosenberg said. There was very little upward revision to back data for previous months, the workweek contracted -- fewer hours tend to mean fewer employees are needed -- and temp agency employment dropped by 7,500 after eight months of increases.

Fewer hours and fewer temporary workers, combined with March's lukewarm hiring numbers, could indicate that the U.S. economy is beginning to slow its recovery, the Toronto-based analyst wrote.

"The labour market is one critical part of the economic landscape that is in the process of healing but has hardly healed, and until it does, one can reasonably expect the economy to remain on fragile terrain," he wrote.

A third round of quantitative easing from the Federal Reserve could be on the horizon if March's employment numbers turn into a trend, Rosenberg wrote.

"While today's data would seem to reinforce the near-term corrective phase in the equity market, look at the bright side. A few more months of numbers like this and QE3 will surely be back on the table," he said.