U .S. March Jobless Rate Falls to 4.2%, a 29-Year Low, as 46,000 Jobs Added.
Hi Lee:
I am sure you have seen it already but here is the data everybody was waiting for anxiously anyway for those who didn't pay attention,looks like best of both worlds to me.What do you think the reaction of the market will be come Monday?
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Treasury Bonds Post Biggest Gain in Four Weeks After March Jobs Report.
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<BU.S. Added 46,000 Jobs in March; Jobless Rate 4.2% (Update2)
(Adds latest markets in 6th paragraph.)
Washington, April 2 (Bloomberg) -- The U.S. unemployment
rate fell to a 29-year low of 4.2 percent in March from 4.4
percent a month earlier, even as the economy added jobs at the
slowest pace in more than three years. Wage increases were tame.
Last month's gain of 46,000 jobs, on top of a revised
increase of 297,000 jobs in February, fell below analysts'
forecasts of a gain of 147,000, Labor Department figures showed.
Analysts expected a jobless rate of 4.4 percent for March;
unemployment was last at 4.2 percent in February 1970.
Workers' average hourly earnings, a gauge of business costs,
rose 0.2 percent -- or 3 cents -- to $13.09 in March, following
an increase of 0.2 percent during February, previously reported
as a gain of 0.1 percent.
The smaller-than-expected payroll increase ''doesn't call
into question the strength of the economy, but it tempers some
fears it's accelerating,'' said Greg Jones, chief economist at
Briefing.com in Jackson, Wyoming. ''Even with tight labor
markets, we're seeing no acceleration of inflation.''
The statistics reflect ''only a temporary weather-related
slowdown,'' said Richard Yamarone, senior economist at Argus
Research Corp. in New York. ''Every store that I walk by, the
'help-wanted' sign is still in the window. This economy is
heading toward the longest expansion in history.''
Bonds gained after the report showed wage gains aren't
picking up and payrolls grew at the slowest pace since the
economy lost 48,000 jobs in January 1996, when much of the nation
ground to a halt because of blizzards. The Treasury's benchmark
30-year bond rose 3/4 point, pushing down its yield 5 basis
points to 5.62 percent.
Scarce Workers
The decline in the March unemployment rate was due to a
455,000 decrease in the civilian labor force. Federal Reserve
Chairman Alan Greenspan and others have warned that at some point
the red-hot U.S. economy will run out of workers.
The economy is ''productively competing for scarce
resources,'' Greenspan said in a March 9 speech. He described
U.S. growth as ''vigorous'' and labor markets as ''taut.'' The
most common complaints of small businesses, Greenspan said,
''have centered on the difficulty of filling jobs with qualified
workers in the midst of strong competing demands for labor.''
That could lead eventually to higher labor costs as
companies have to compete for scarce workers.
''We're running out of explanations for why we're not seeing
the pass-through of tight labor markets to wages,'' said Mike
Englund, chief economist at Standard & Poor's MMS in Belmont,
California. ''It probably is a combination of global competition
holding prices down and productivity, which is boosting output
per worker.''
Productivity Gains
Greenspan and other Fed officials have said there may be new
forces at work in the economy that reduce price pressures. U.S.
productivity, or worker output per hour, grew at a 4.6 percent
annual rate in the fourth quarter of last year. That's four times
the average annual productivity growth over the last two decades
of about 1.1 percent.
''Rapid productivity growth is one factor that has helped
keep inflation low,'' Philadelphia Fed Bank President Edward
Boehne, a voting member of the FOMC, said last week.
It's not unusual for the unemployment rate to fall when job
growth figures are subdued. The government's payroll figures are
based on a survey of businesses, while the unemployment rate is
based on a survey of households.
Service-producing employment rose by 135,000 in March.
Manufacturing employment decreased by 35,000 last month, adding
to a total factory job loss of 374,000 since March 1998.
Construction employment fell by 47,000, the biggest decline since
a 55,000 drop in March 1993.
Bad Weather
Businesses are surveyed by the Labor Department about how
many employees they added or subtracted during the week
containing the 12th of the month. During that week in March, a
major winter storm ''delivered a mixture of precipitation,
including a wide swath of heavy snow from the Corn Belt to the
Atlantic Coast,'' according to a weather summary provided by the
Department of Agriculture.
That's one reason analysts expected a drop in construction
employment during the month. They also anticipated stagnant
employment in manufacturing.
The Labor Department also said:
-- Average weekly hours worked fell to 34.5 in March from
34.6 during February.
-- Manufacturing overtime was unchanged at 4.5 hours during
March.
-- The index of hours worked, a gauge of economic growth
that combines changes in the work week and changes in payroll
growth, fell to 146.5 in March from 147.2 during February.
-- Average weekly earnings decreased to $451.61 during March
compared with $451.88 during February.
-- The percentage of unemployed workers who voluntarily quit
their jobs in March rose to 13.5 percent from 12.3 percent during
February.
-- The percentage of the U.S. population holding jobs
decreased to 64.3 percent in March from 64.4 percent during
February.
During February, employment gains totaled a revised 297,000,
more than the Labor Department's initial estimate of a gain of
275,000 jobs.
Jobless Claims Low
The economy has added 560,000 jobs since the end of last
year. Other recently released statistics show a labor market that
doesn't appear to be cooling.
Yesterday, the government reported that the number of
workers filing for state unemployment benefits fell last week to
the lowest level in a month. Jobless claims have stayed below the
300,000 mark for nine straight weeks, the longest such stretch
since an 18-month run that ended in December 1973.
Company job advertising is close to a nine-year high,
according to the Conference Board's latest survey. The New York-
based business research group said its index of help-wanted ads
in 51 newspapers across the country fell to 93 from 94 in
January. The last time it was higher than January's reading was
January 1990.
Robust labor conditions have kept consumer confidence high.
''It's great news for the consumer,'' said Vincent Boberski, a
senior economist at Dain Rauscher Inc. in Chicago, before the
report. ''It will keep confidence real high. When you combine
that with rates at the level they're at and how strong equity
market continues to be, it's great news for the economy.''
The Conference Board's index of consumer confidence rose in
March to the highest level since last July. An index measuring
the abundance of jobs rose to 48.2 in March from February's
reading of 47.8.
While employment in the service industry has been on the
rise, the nation's manufacturers are still cutting back their
work forces as they contend with sluggish export markets.
Caterpillar Inc., the world's largest maker of construction
equipment, said last month that first-quarter profit will be half
of what analysts expected because of Brazil's recession. As a
result of the economic weakness in Brazil and other countries
around the world, Caterpillar is laying off workers.
Its San Diego, California-based solar-turbine business will
cut 600 jobs, or about 10 percent of the division's total
workforce, the company said. A tractor plant in East Peoria,
Illinois will be idle the week of April 19, affecting 1,200
employees.
Still, there are signs manufacturing is poised to rebound.
The National Association of Purchasing Management's manufacturing
index rose last month to 54.3 from 52.4 in February, suggesting
purchasing managers believe factory activity is expanding. The
NAPM's index of factory employment rose to 48.0 in March from
45.0 in February, indicating manufacturers are cutting jobs at a
slower rate. |
