DJ DATA SNAP: Big US Job Drop Suggests US In Recession
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Mar Employment Report ! Consensus: !
Mar Feb ! Payrolls: -50K !
Payrolls -80K -76Kr ! !
Unemployment Rate 5.1% 4.8% ! Actual: -80K !
Hourly Earnings $17.86 $17.81r ! !
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By Brian Blackstone
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--A third-straight sharp drop in U.S. payrolls confirmed Federal Reserve Chairman Ben Bernanke's recent warning that the U.S. economy may be in recession, as the unemployment rate moved sharply higher.
The data suggest additional interest rate cuts by the Fed are likely, even though the already-aggressive response by officials doesn't leave them too much room for additional easing.
Nonfarm payrolls fell 80,000 in March, the Labor Department said Friday, its biggest decline in five years, after falling by 76,000 in both January and February. Both were revised to show even bigger losses.
Had it not been for a rise in government jobs last month, payrolls would have fallen by around 100,000.
The unemployment rate, which is calculated using a separate survey of households, jumped 0.3 percentage point to 5.1%, the highest since September 2005, when it was also 5.1%.
Average hourly earnings increased $0.05, or 0.3%, to $17.86. That was up just 3.6% from a year earlier, suggesting wage costs remain under wraps. Fed officials are counting on the slack that comes from a slowing economy to offset higher energy, food and commodity prices and the weak dollar and keep inflation in check.
Wall Street economists had expected a 50,000 decline in payrolls and a 5% unemployment rate. A closely-watched report from ADP and Macroeconomic Advisers that attempts to mirror the jobs report had signaled a slight rise. But a surprising spike in new jobless claims to over 400,000 - a level usually associated with recession - caused some economists to scale back their forecasts into the minus column.
The Fed has lowered the fed funds rate at which banks lend to each other by three percentage points since September to 2.25% to contain the effects of a credit and housing crisis on the broader economy. With the jobs data providing clear proof that the economy is buckling, the Fed will face pressure to lower rates even more.
Bernanke on Wednesday warned for the first time that "a recession is possible." Yet last month's payroll decline won't come as too much of a surprise, as Bernanke also told lawmakers Wednesday that "much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year."
Still, the jobs slump may heighten fears at the Fed of a negative "feedback loop" in which financial market strains lead to a weaker economy, which in turn leads to more financial turbulence.
The Labor Department said hiring last month in goods producing industries fell 93,000. Within this group, manufacturing firms cut 48,000 jobs. the sector has lost jobs every month for almost two years. Automobile employment fell 24,000, the Labor Department said. "This decline largely reflected the impact of a strike at an automotive parts maker," Bureau of Labor statistics Commissioner Keith Hall said in a prepared statement.
Construction employment was down by 51,000, the ninth-straight drop. Residential building bore the brunt of the decline, but nonresidential construction jobs fell as well, suggesting that the housing slump is broadening.
Service-sector employment rose just 13,000 in March and only managed 12,000 new jobs for the entire first quarter. Business and professional services companies shed 35,000 jobs, and the financial sector lost jobs for the eighth-straight month, reflecting recent credit and mortgage-market turmoil.
Temporary employment, which economists consider a leading indicator for future job trends, fell by over 21,000 last month.
Education and health services employment, in contrast, advanced by 42,000. Leisure and hospitality rose 18,000, while retail trade lost 12,400 payrolls.
The government added 18,000 jobs.
One bright spot in the report was a 0.1 percentage point rise in the average workweek to 33.8 hours. A separate index of aggregate weekly hours also rose.
-By Brian Blackstone; Dow Jones Newswires
JAN. FEB. MAR.
U.S. Unemployment Rate 4.9% 4.8% 5.1%
Data From Establishment Survey
Non-farm Payrolls (000s) 138,002 137,926 137,846
Monthly Change -76 -76 -80
Goods Producing 21,907 21,825 21,732
Construction 7,426 7,389 7,338
Manufacturing 13,737 13,691 13,643
Service Producing 116,095 116,101 116,114
Retail trade 15,472 15,426 15,413
Professional, Business 18,101 18,071 18,036
Education, Health 18,617 18,657 18,699
Leisure, Hospitality 13,644 13,664 13,682
Government 22,336 22,369 22,387
Average Hourly Workweek
Total private 33.7 33.7 33.8
Manufacturing 41.1 41.2 41.3
Mfg Overtime 4.0 4.0 4.1
Avg Weekly Earns Total Private $598.18 $600.20 $603.67
Avg Hourly Earns Total Private $17.75 $17.81 $17.86
Data From Household Survey
Civilian Labor Force (000s) 153,824 153,374 153,784
Change -42 -450 410
Employment(000s) 146,248 145,993 145,969
Change 37 -255 -24
Unemployment (000s) 7,576 7,381 7,815
Change -79 -195 434
Not in Labor Force (000s) 78,792 79,436 79,211
Change -498 644 -225
Persons Who Want Job 4,857 4,772 4,730
Change 160 -85 -42
Source: U.S. Department of Labor
On the web: www.bls.gov
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posted by Cannon Trading at 5:53 AM
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