Could it be deja vu all over again? U.S. employment suffered its sharpest decline since November 1991, which was not long after the last recession had ended and doubts lingered that the downturn was over. Many analysts, however, do not appear to see an end to the downturn in sight.
"This [data] is telling us that the tight labor market no longer exists and it is perhaps another sign that recession is looming,'' said Peter Cardillo, director of research at Westfalia Investments in New York.
According to Carol Stone, deputy chief economist of Nomura Securities International Inc. in New York, "I don't know whether it will be in the next couple of days, but this adds to and brings more force to the argument for an intermeeting rate cut."
The unemployment rate edged up to 4.3% -- a mark not seen since July 1999 -- and, not surprisingly, the manufacturing sector contributed to the downfall with another sharp decline.
According to the Labor Department's March 2001 Employment Report, total nonfarm payroll fell 86,000; most analysts were expecting a decline near the 60,000 mark. The drop follows a revised February report that boasted 140,000 new jobs for nonfarm payroll. Employment gains in finance and many components of services could not negate the large declines in manufacturing, help supply, and retail trade. A deeper look into March results shows:
- Increases in heavy construction and special trades pushed construction employment up 12,000.
- Transportation and public utilities employment had a slight gain, thanks in large part to the trucking industry, which has resumed adding workers after no growth the latter part of 2000.
- Employment in services and government saw little change.
- Retail trade fell 46,000, negating the 37,000 gain in February.
The manufacturing industry lost 81,000 jobs in March -- its eighth straight month of losses -- raising its total loss since last June to 451,000. The declines were widespread and, in many cases, have hit segments already in descent.
- Industrial machinery: 16,000 in March; 36,000 for the year
- Fabricated metals: 11,000; 37,000 for the year
- Electrical equipment: 7,000; 20,000 since December
- Additional declines occurred in auto manufacturing and rubber/plastics.
At a Glance: Hours and Earnings
- The manufacturing workweek remained at 40.7 hours (one full hour higher than last year); overtime fell slightly (0.1) hour to 3.8 hours.
- Average hourly earnings rose 6 cents to $14.17, following a 7 cents gain in February.
- Average weekly earnings increased 0.7% to $486.03.
- Over the past 12 months, average hourly earnings and weekly earnings have increased by 4.3% and 3.7%, respectively.
The report on April employment will be released on May 4, 2001.
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Read the latest report from the Bureau of Labor Statistics.