DATA SNAP: US Feb Job Cuts Are Largest Since Nov 2001
07 Mar 08:30
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February Employment Report !Surprise: Yes !
Feb Jan !Trend:Sluggish!
Payrolls -308K +185K !Recovery !
Unemployment Rate 5.8% 5.7% !Consensus: !
Hourly Earnings $15.08 $14.97 !Payrolls +5K !
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By Joseph Rebello and Phil McCarty
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--U.S. employers cut more jobs last month than at any
time since the recession of 2001 as the country closer to a war with Iraq,
ending a fleeting recovery in the jobs market and driving up the unemployment
rate.
Non-farm business payrolls declined by 308,000, wiping out the gain of
185,000 recorded in January, the Labor Department said Friday. The unemployment
rate, which had dropped to 5.7% in January, inched up again to 5.8. Still,
workers' wages grew 0.7%, the biggest increase in nearly 16 years.
The severity of the job-cutting surprised Wall Street and could deal a blow
to consumer confidence and spending, which so far has helped keep the economy
afloat. A consensus forecast of economists surveyed by Dow Jones Newswires and
CNBC had called for an increase of 5,000 payrolls and a 5.8% unemployment
rate.
Kathleen Utgoff, who heads the Labor Department's Bureau of Labor
Statistics, said the numbers reflected "widespread declines" in jobs -
particularly in the manufacturing, construction, retail-trade, services and
transportation industries. She said the bureau was "unable to quantify" the
effect on the numbers of the 150,000 reservists recently called to active
military duty.
Since the start of 2001, when the economy slipped into recession, U.S.
employers have cut more than 2 million jobs. Forecasters say the economy must
grow more than 3% to ensure jobs growth, but it hasn't grown at that pace since
September. The jobs market, as a result, has weakened after a brief recovery in
January.
To ensure faster growth, President George W. Bush has proposed a $726 billion
tax-cut package that his administration will create 1.5 million jobs and expand
the gross domestic product by nearly 2% by the end of 2004. But the Federal
Reserve has shown no inclination to give the economy more stimulus: the central
bank is widely expected to hold its key interest rate at a 42-year low of 1.25%
when its top policymakers next meet on March 18.
The Labor Department attributed the increase in payrolls in February mostly
to job losses in the services-producing industry, which cut 204,000 jobs after
adding 166,000 in January. The retail-trade industry cut 92,000 jobs and the
services industry cut 86,000.
The manufacturing industry trimmed 53,000 jobs in February. The construction
industry, hurt in part by severe winter weather, cut 48,000 jobs after adding
26,000 in January. Only two segments of the jobs market showed an improvement:
government jobs increased by 13,000, and jobs in the finance, insurance and
real-estate industries grew by 3,000.
The employment report also raised worries that inflation
could reemerge after a long period of dormancy. Average hourly earnings rose
11 cents, or 0.7%, to $15.08 in February. That marked the biggest increase
since August of 1987. Wage growth has accelerated in year-on-year terms this
year: the increase in February was 3.2%, down from 2.7% in January.
The average work week, meanwhile, declined for the first time in two months,
adding to other evidence of a deteriorating jobs market. In February, the week
lasted 34.1 hours, down 12 minutes from January.
The government revised its estimates of growth in payrolls and average hourly
earnings in January. Payrolls grew by 185,000 that month, up from the initial
estimate of a 143,000 increase. Average hourly earnings declined a cent from
December to $14.97 in January, compared with the initial estimate of $14.98.
-By Joseph Rebello and Phil McCarty; 202-862-9279; joseph.rebello@dowjones.com
(END) Dow Jones Newswires
03-07-03 0830ET |
