Unemployment climbs to 4.3 percent
By Leigh Strope
AP Labor Writer
WASHINGTON The nation's unemployment rate inched up to a 20-month high at 4.3 percent in March as businesses cut the most jobs in a decade signs that churned fresh recession anxiety for Wall Street and the Bush administration.
|||Employment report: http://www.bls.gov/news.release/empsit.toc.htm|
On Wall Street, the report sent stocks lower after one of the biggest surges in recent years just a day earlier. The Dow Jones industrial average fell 126.96 to close at 9,791.09.
"We're on the edge of recession," said Stuart Hoffman, chief economist with PNC Financial Services. He said of the unemployment figures, "This is not conclusive proof that we've fallen over the edge. It is a reminder of how close we are."
The jobless rate rose 0.1 percentage point from February, the Labor Department reported. The rate last stood at 4.3 percent in June and July of 1999.
Payrolls plunged by 86,000 last month the first decline since August 2000 when 79,000 jobs were cut. Manufacturers continued to hemorrhage, and losses also were posted at temporary employment services and in retail at bars and restaurants, department stores and car dealers. The decline in total payrolls followed a 140,000 gain in February, according to revised figures.
"The new employment numbers show that the patient isn't getting any better, so it's time to prescribe some medicine," said Labor Secretary Elaine Chao. "That is why it is so important that the president's tax cut, which provides a long-term solution, becomes law."
The Republican-controlled House already has approved Bush's $1.6 trillion, 10-year tax cut in its version of the federal budget. But in the evenly divided Senate, Democrats yesterday were able to shrink the size and cost to about $1.2 trillion.
The decline in new jobs last month marked a much weaker performance than many analysts were expecting. The 86,000 drop was the largest since November 1991, when payrolls plummeted by 94,000. Some sectors of the economy lost jobs, some gained, but overall, there was a loss of 86,000 jobs.
The report comes days before Bush sends his full budget plan to Congress that will include a 5 percent cut to the Labor Department's budget. Much of the $600 million in cuts will come from job training programs.
But Chao said the money is being trimmed from some job training programs that have unspent funds from previous years, and will "not affect this year's training." Details are to be released Monday.
"Services to those who are facing a difficult future obviously will not be affected this year," Chao said.
Manufacturing, which has been bearing the brunt of the economic slowdown, lost 81,000 jobs last month, with cuts in a range of industries from auto manufacturing to electronic components production. Since last June, lost factory jobs totaled 451,000.
Many analysts think manufacturing already is in a recession. They have worries the weakness is spreading and will break the nation's record-long stretch of uninterrupted growth, which started its 11th year in March.
The new numbers "clearly give warning that there are still some tough times to go before the economy is out of danger," said Joel Naroff, president of Naroff Economic Advisors.
Seeking to prevent the economy from toppling into recession, the Federal Reserve has cut interest rates three times this year, totaling 1.5 percentage points. Economists said yesterday's report raises the odds that the Fed might lower interest rates again before the next scheduled meeting on May 15.
Average hourly earnings, a key gauge of inflation, rose in March by 0.4 percent to $14.17 an hour, slightly faster than many analysts were expecting, but down from a 0.6 percent increase the month before. The length of the average workweek edged up to 34.3 hours from 34.2 hours in February.
Some companies are coping with the weak economy by sharply cutting production, leading to reductions in workers' hours and overtime, and forcing thousands of layoffs. Temporary workers have been particularly hard hit.
A huge drop of 83,000 jobs was reported last month for temporary help firms, which have seen employment fall for six straight months, losing 273,000 jobs over that period.
DuPont said this week it would cut 4,000 jobs. That followed earlier layoff announcements from such big business names as Walt Disney Co., DaimlerChrysler, Motorola, Lucent Technologies and Procter & Gamble.
The service sector, normally the engine of job creation, also lost jobs last month. Retailers cut 46,000 jobs, which included 25,000 positions at bars and restaurants, 19,000 jobs at department stores and 6,000 jobs at automotive dealers and service stations.
The report had a few bright spots. Construction companies added 12,000 jobs, bringing the total jobs added since October to 148,000. Health care firms saw a 26,000 increase, social services positions grew by 15,000 and computer services were up by 11,000.