Private-sector report shows thousands of jobs lost in March
Thursday, April 1, 2010
Private-sector employers shed 23,000 jobs in March, surprising economists who expected job growth last month and raising doubts that Friday's government report on March unemployment will be as positive as hoped.
Forecasters expected the private sector to add 40,000 jobs last month. But the ADP Employer Services report, released on Wednesday, said otherwise, underlining the shaky nature of the economic recovery.
Big losers in the ADP report were the construction industry, which lost 43,000 jobs in March, and factories, which shed 9,000 jobs. On the plus side, service providers added 28,000 workers last month.
The official February U.S. unemployment rate was 9.7 percent, down from its recent high of 10.1 percent in October. Forecasters expect to see no change in the rate for March. Most economists say unemployment will remain well above 9 percent for the remainder of 2010.
The ADP number does not always correlate to the government's unemployment figures. However, because ADP counts only private-sector employment, not government jobs, it may show a clearer picture of the state of U.S. joblessness. Friday's government report will be inflated by as many as 100,000 new temporary jobs -- workers hired for this year's census. Throughout the course of this year, the Commerce Department expects to hire more than 600,000 census workers, whose jobs will end when the survey does.
"While many are waiting for Friday's payroll figure to tell them the state of the U.S. labor market, I'm going to rely on today's ADP report as a better gauge," wrote Miller Tabak equity strategist Peter Boockvar. "That is because it is private-sector based and thus won't be distorted by the likely 100,000-plus addition of government census workers." Additionally, Boockvar said, the ADP report better accounts for the employment impact of the big February snowstorms.
Traders and investors also will be eyeing Thursday's jobless-claims report, which counts the number of new claims filed the previous week. Forecasters expect last week's new claims to come in at about 442,000, largely unchanged from the week before. That's a significant improvement from this time last year, when each week there were more than 600,000 new jobless claims. However, economists say that lasting job creation cannot occur until the new weekly jobless-claims number remains in the low 400,000s or goes lower.
Other data out on Wednesday suggested trouble ahead if the unemployment rate doesn't start dropping soon.
The Commerce Department said that consumer spending rose only 0.3 percent last month, a troubling figure for an economy that is 70 percent based on consumer spending.
"The details of the February personal income report suggests that the consumer is running out of firepower unless the labor market turns sharply positive in the weeks immediately ahead," according to an analysis from Mizuho Securities USA on Wednesday. "In fact, headline personal income, disposable income and wage and salary income were all flat in February as work week data were obviously biased down by adverse weather conditions."
Wall Street seems unconcerned about the jobless recovery, as stocks close 2010's first quarter on a high note.
Year-to-date, the Dow Jones industrial average of 30 blue-chip stocks is up more than 4 percent. The broader Standard & Poor's 500-stock index is up 5 percent, and the tech-heavy Nasdaq composite index is up nearly 6 percent. Since the early-March 2009 bottom, the Dow is up 66 percent, the S&P 500 is up 73 percent and the Nasdaq is up 89 percent, though all three major indexes are still well off their all-time high set in October 2007 for the S&P and Dow.
"This Friday's employment report from the Labor Department will likely show an increase in payrolls, but that won't change the basic fact that unless policymakers take bold action, all key signs point to a very long, very slow recovery for jobs," said Heidi Shierholz, economist for the liberal Economic Policy Institute, which favors job-creation solutions such as new laws that would shorten the workweek.