US economy sheds 108,000 jobs in March
By Peronet Despeignes in Washington
Published: April 4 2003 15:13 | Last Updated: April 4 2003 15:13
Jobs in the US continued to evaporate quickly last month, according to an official report released on Friday.
Non-farm payrolls shrank by a seasonally adjusted 108,000 in March, following a 357,000 drop in February - a sharp upward revision from the previous estimate of 308,000, inflated somewhat by bad weather and the call to arms of military reserves. The decline in jobs in March was widespread.
The news could add to revived speculation the US is threatened with a new recession could dull investor optimism over recent US successes in the war with Iraq.
Even though the unemployment rate remained steady at 5.8 per cent, the continuing job losses threaten to further weaken the struggling economy. The unemployment rate is based on a separate survey of households and it remained unchanged because a large number of Americans abandoned the search for work and are therefore not counted as part of the labor force or as unemployed. Only 62.3 per cent of the US population is employed a nine-year low.
Economists caution employment is a lagging indicator of the economy's direction. Significant job losses have occurred in previous recoveries, only to give way to robust expansions. However, job losses during this "recovery" phase have so far dwarfed in size and surpassed in duration losses seen in most previous post-recession periods, including the infamous "jobless recovery" that followed the 1990-91 recession.
Traders in futures markets have been speculating on or hedging against the possibility that the US economy remains fundamentally sick - that its weakness could extend beyond recent bad weather, military-reserve call ups, fears of terror or the resolution of the Iraq dispute - and that this will eventually force the Fed's hand.
The fed funds futures market this week priced in a rate cut of at least a quarter point by September as an absolute certainty, with some economists now talking more openly about the possibility of a "surprise" Fed rate cut between scheduled meetings.
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