(AFP) – Apr 4, 2008
WASHINGTON (AFP) — US employers cut a surprisingly large 80,000 jobs in March, the biggest decline in employment in five years, a government report showed Friday in another ominous sign for economy.
The mounting job losses swelled the national unemployment rate to 5.1 percent last month compared with 4.8 percent in February.
The latest nonfarm layoffs represented the sharpest monthly decline since March 2003 and the start of the Iraq war, while the unemployment rate leapt to its highest peak since September 2005, just after Hurricane Katrina devastated the US Gulf coast.
"Some people were questioning whether we're in a recession. Now they can't. We're clearly and positively in a recession," said Robert MacIntosh, chief economist at Eaton Vance Corp.
It was the third straight month of job losses and steeper than the figure of 50,000 losses expected by most economists.
The Labor Department survey on nonfarm payrolls also revised February and January's job losses higher to 76,000 in each month, compared with prior estimates of 63,000 and 22,000, respectively.
As a result, a total of 232,000 positions were cut by US employers during the first three months of 2008 amid mounting economic uncertainty.
The subdued employment reading appeared to support the view of a growing number of economists that the US economy is in a recession after economic growth slowed dramatically to a 0.6 percent annualized pace during the fourth quarter of 2007.
Economists said the latest employment snapshot would pressure the Federal Reserve to continue slashing interest rates to fire up economic momentum.
The Fed has aggressivly cut its key short-term federal funds rate by three percentage points since September to 2.25 percent amid a lingering housing slump, a related credit crunch and a declining stock market.
Fed chairman Ben Bernanke told Congress Wednesday that it was possible the economy might be in recession, but he said any downturn would likely be mild.
A recession is typically defined as two straight quarters of negative economic activity. The last time the United States endured a recession was 2001.
The worsening job situation is heating up debate in this year's presidential election.
Democrats and presidential hopefuls Barack Obama and Hillary Clinton blamed the rising job cuts on Republican economic policies, but the White House said a recently-approved economic stimulus should boost job creation.
Economists said the job losses will weigh on the economy, but said the slew of rate cuts and the giant 168-billion-dollar economic stimulus approved by President George W. Bush and Congress should help growth rebound in coming months.
The construction industry shed 51,000 positions during March as the housing downturn and a slowdown in some big commercial property projects triggered fresh layoffs.
Manufacturers slashed 48,000 posts last month while 35,000 positions were cut by professional and business services firms.
The job losses also swamped the retail industry which cut 12,000 workers from payrolls.
Big auto manufacturers have shrunk their payrolls in recent months amid declining car sales, while Wall Street's liquidity squeeze has triggered layoffs at banks, and finance and mortgage firms.
One bright spot was the education and health care sectors which added 42,000 jobs to industry payrolls. The government hired 18,000 new workers.
Mounting employment losses are nonetheless likely to add to rising economic angst as workers who have lost their jobs cut back on spending.
"How severe a recession? It will be short and shallow, we'll end up with two negative quarters of GDP (gross domestic product) and then we'll have a very minor positive reading in the third quarter," MacIntosh predicted.
The survey also showed that average hourly earnings rose by 0.3 percent to 17.86 dollars, matching most economists' expectations.
Copyright © 2013 AFP. All rights reserved. More »