Looks like the market rally on the previous day may be short-lived:
March Jobless Rate Highest Since Mid-1999
Unemployment Up to 4.3 Percent; 86,000 Jobs Lost
from Bloomberg News
WASHINGTON (April 6) -- Businesses eliminated workers in March for the first time in seven months and the unemployment rate rose to 4.3 percent, the highest in more than 1 1/2 years, government figures showed.
Payrolls unexpectedly fell by 86,000 during the month, after a revised gain of 140,000 jobs in February, the Labor Department said. The decline in payrolls was the largest since November 1991 when the economy was emerging from the last recession.
Jobs in services declined more than any other month since November 1991 and factory employment fell for an eighth straight month. Companies such as Citigroup Inc. and Delphi Automotive Systems Corp. are firing workers to cut costs as the economy slows, profits slump and the stock market weakens.
``The premier signal of economic distress is job losses -- big ones,'' said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi Ltd. in New York, before the report. ``This may be the tip of the iceberg in terms of job losses. The Federal Reserve will need to stay on the job for a while longer.''
Unemployment rose from 4.2 percent in February and is the highest since July 1999. Analysts expected an unemployment rate of 4.3 percent in March and an increase of 60,000 jobs after February's previously reported gain of 135,000 positions.
Fed officials reduced their benchmark overnight bank-lending rate three times since Jan. 3 to bolster the economy. In the final three months of 2000, the economy grew 1 percent at an annual rate, the slowest in 5 1/2 years. The economy probably grew close to 1 percent in the first quarter of this year, analysts said.
Economy's Effect
Central bankers have said in the last week that the slowdown in the economy would probably push unemployment higher, though they expect economic growth to rebound later this year.
``As long as the economy grows at a rate that is less than that of potential, we're likely to see the unemployment rate move up,'' San Francisco Fed President Robert Parry told reporters after a speech yesterday. ``This is roughly the time when you would begin to see unemployment pressures rise.'' Until growth picks up ``rather smartly,'' pressure on the unemployment rate will continue, he said.
Average hourly earnings rose 0.4 percent, or 6 cents, to $14.17 last month from $14.11. Analysts also expected a 0.3 percent increase in average hourly earnings, after a 0.5 percent increase in February. Average weekly earnings rose to $486.03 during March from $482.56 in February.
Manufacturing
Factory employment fell 81,000 in March, the eighth straight decline, after a 97,000 decrease a month earlier. Delphi said last month it will eliminate 11,500 jobs, or 5.4 percent of its workforce, in the next year as the largest auto-parts maker seeks to cut costs because of slowing demand.
Manufacturing hours held at 40.7 in March. Overtime fell to 3.8 hours in March from 3.9 hours in February. In all industries, hours worked rose to 34.3 from 34.2 in February.
Service-producing employment -- which includes government hiring -- fell 19,000 -- the first decrease since July 2000 -- after rising 227,000 a month earlier. Retail employment fell 46,000 after rising 78,000 in February.
Personnel supply service companies, which provide business with temporary help, eliminated 76,000 jobs in March, the sixth straight decrease.
Employment at financial services firms rose 17,000 in March after rising 13,000 in February. Still, some companies are starting to eliminate jobs.
Citigroup
Citigroup, the largest U.S. financial services company, said this week it's firing several hundred employees to trim costs as the stock market falls. The Dow Jones Industrial Average has declined 8 percent this year on concerns earnings will suffer because of the sluggish economy.
Citigroup's firings follow similar actions this year at other financial institutions, such as Bear Stearns Cos. and Credit Suisse First Boston, which have witnessed a drop in equity underwriting and mergers-and-acquisition activity as the stock market falls.
Construction jobs rose 12,000 in March after rising 7,000 in February and 157,000 in January when workers returned after severe winter weather late last year damped the need for employees.
Meanwhile, the pool of available workers -- which combines the number of unemployed job seekers, plus those not looking for work in the last 12 months who said they would take a job -- fell to 10.3 million in March from 10.4 million the previous month.
The Labor Department also said the percentage of the U.S. population holding jobs fell to 64.3 in March from 64.4 percent in February.
Other Manufacturers
Solectron Corp., the biggest contract electronics manufacturer, said this week it plans to fire 1,075 workers, or 1.5 percent of its workforce, and will close a plant in Georgia because of slowing demand. These cuts are in addition to the 8,200 firings the company announced last month that lead to a $300 million to $400 million charge against earnings for the quarter.
Visteon Corp., the third-largest auto-parts maker, said on Wednesday it will eliminate about 1,800 jobs worldwide, including about 950 U.S. employees, as North American vehicle production slows. Parts suppliers are seeing less demand as the biggest automakers in the U.S. pare production to trim excess inventory.
The government's monthly job growth figures are based on statistics provided by businesses, while the unemployment rate is based on a survey of U.S. households.
Apr/06/2001 8:29 ET
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