U.S. companies cut 108,000 jobs last month, as concerns about the war in Iraq and fears of terrorism fed weakness in manufacturing, restaurants and tourism, the Labor Department reported yesterday. The unemployment rate remained at 5.8 percent.
Factory payrolls fell by 36,000 last month, the 32nd consecutive monthly drop. Since July 2000, the number of factory jobs has declined by 2.2 million, or nearly 12 percent, the report said. Such numbers have led some analysts to become more pessimistic about the economy's ability to avoid slipping into another recession.
"Just the fear of losing a job can sharply dampen consumer spending. With consumer demand already soft, a weakening job market could set off a downward spiral of reduced spending and increased job losses," said Bill Cheney, chief economist at John Hancock Financial Services Inc. in Boston. "We just won't know how strong or weak the economy is until the war is over."
Payroll jobs fell by 357,000 in February, the report said, more than previously reported. Analysts said that loss was enlarged both by unusually bad weather and the mobilization of military reservists and National Guard members. A sizable increase in payroll jobs in January limited the total loss for the first quarter to 262,000, about 100,000 more than in the previous three months.
Commerce Secretary Donald L. Evans said last month's unemployment numbers "clearly show that America's economy is not growing at its full potential," and he urged Congress to act on President Bush's package of tax cuts, which he said would create 1.4 million jobs.
Rep. Fortney "Pete" Stark of California, the ranking Democrat on the Joint Economic Committee, responded to the numbers by saying Bush is "out of touch with the real problems facing American workers. . . . The president needs to work with Congress to stimulate the economy by providing aid to the states and another extension of federal unemployment insurance benefits."
Several recent reports have highlighted economic concerns about the impact of the war in Iraq. The Institute for Supply Management cited war worries as the key reason its surveys of the manufacturing and non-manufacturing sectors began to contract last month. Fears of terrorism have hurt tourism, one reason the number of jobs at eating and drinking establishments keeps falling. In recent months, employment in the amusement and recreation industry, and at hotels and other lodging places, has also dropped.
Some analysts suggested that the job figures were not as dire as they might seem. "When one steps back from the data and looks at the numbers more broadly, the first-quarter weakness was not nearly as horrible as the headline numbers suggest," said Ray Stone of Stone & McCarthy Research Associates, a financial markets research firm.
"Of the 262,000 jobs lost during the first three months of the year, probably somewhere around half might be attributed to the mobilization of National Guard and reservists," Stone said. "And much of the other half of the decline can be traced to industries affected by weather . . . and the broader geopolitical cloud."
The employment picture painted by the Labor Department's monthly survey of American households is less dark than that shown by the department's survey of businesses, on which the payroll results are based.
While payrolls fell by 262,000 in the first quarter, according to the household survey the number of people with jobs rose by nearly 200,000. As a result, the level of joblessness fell to 8.4 million for the quarter, down by nearly 200,000 from the final three months of last year. Last month an additional 2.5 million people said they would like a job but only about a third of that group had looked for one in the previous 12 months.
Among the 8.4 million unemployed, 4.6 million had either lost their job or completed a temporary job. Of the remainder, 2.4 million were people who had reentered the workforce after being out of it but did not find a job. Roughly 800,000 had left their last job, while more than 600,000 were first-time job seekers.
More than one-third of the jobless had been without work for 15 weeks or more, and 1.8 million, more than one-fifth of the total, for more than half a year. In March 2002 the number of long-term unemployed was 1.3 million.
Meanwhile, the length of the average workweek rose last month by 12 minutes, to 34.3 hours. As a result, the total number of hours worked rose by 0.3 percent despite the overall drop in payrolls.
For the entire first quarter, the total number of hours worked fell slightly from the previous three-month period. However, many economists believe the economy grew at about a 1.5 to 2 percent annual rate in the quarter as a result of a continued gain in productivity -- the amount of goods and services produced for each hour worked.