Employers Cut 80,000 Jobs in March
Friday, April 4, 2008; 12:30 PM
Joblessness soared and employers shed jobs in March, the government said today in a report that offers strong evidence that the nation is in recession.
The unemployment rate rose to 5.1 percent, from 4.8 percent, the Labor Department said. Employers reduced their payrolls by 80,000 jobs in March, the steepest loss in five years and the third straight month of decline. And the department revised the previous two months employment levels down by another 67,000 positions.
The numbers are far worse than economists were forecasting, and they solidify the case that a serious economic downturn is underway.
"This paints a clear picture that we entered a recession in January," said Dana Johnson, chief economist of Comerica Bank. "This is an economy that is contracting."
The stock market was mixed on the news, with the Dow Jones industrial average off 30 points at 11:45 a.m. but the Standard & Poor's 500-stock index was up slightly.
The report shows clearly how the problems in the housing and financial markets are rippling through different sectors, showing the deep interconnections between seemingly separate parts of the economy.
The number of construction jobs, which has been falling steadily for 18 months, continued its rout. That sector shed 51,000 positions, as fewer residences are being built.
Fewer houses mean less construction and building materials; the number of manufacturing jobs fell by 48,000, with some of the steepest losses among makers of lumber, drywall and other materials. Automakers also shed jobs. With their homes less valuable, Americans seem to be holding off on big-ticket purchases.
Consumers pulling back means stores need fewer workers; the number of retail jobs fell by 12,400. The steepest losses were in sellers of building materials and appliances, both of which are highly tied to the housing business.
And the problems in the financial markets caused finance firms to cut 5,000 jobs, with the steepest losses in "credit intermediation" companies, which includes banks and mortgage brokers.
This has caused even businesses that have little to do with housing to become less confident about the future. The number of professional and business services jobs, a sector that had been keeping the economy afloat, was down by 35,000.
The steepest service sector losses were in employment services. When employers want to cut back, they are often more inclined to trim temporary employees than permanent staff.
"The first thing people do is cut back on temporary staff," said Paul Villella, chief executive of HireStrategy Inc., a Reston, Va.-based employment services firm. "Then if things get really bad, they cut into their core staff and do layoffs."
Information firms, which include publishers, broadcasters and telecommunications outfits, cut 6,000 jobs, reflecting the broadness of this retrenchment.
"There is more sluggishness around hiring," said Villella. Clients that were looking to hire 10 new people have cut back to six, he said, and are taking longer to bring those six onto staff.
So far in this downturn, there have been relatively few layoffs -- instead, employers have held off on hiring and let empty positions stay that way. But that may be changing. Last week, the number of new claims for unemployment insurance rose to its highest level since Hurricane Katrina, a potentially worrisome sign.
There were some bright spots in the report. Wages are climbing at a reasonable pace, with average hourly earnings up by 0.3 percent, or 5 cents in March.
And a handful of sectors are continuing to add jobs, notably education and health services, which added 42,000 positions; and leisure and hospitality, which added 18,000 jobs.