t r u t h o u t | Report
Friday 04 April 2008
The private sector is shedding jobs at the rate of almost 100,000 per month.
The establishment survey showed the economy losing 80,000 jobs in March, the third consecutive month of job loss. The private sector lost 98,000 jobs, the fourth consecutive decline in private sector employment. Overall, the private sector has lost 296,000 jobs over the last three months, a decline of 97,000 per month. Not surprisingly, the weakness in the labor market is also affecting wage growth. Wages grew at just a 2.5 percent annual rate over the last quarter, well below the rate of inflation and down sharply from the 3.6 percent growth rate over the last year. The household survey showed a 0.3 percentage point jump in the unemployment rate to 5.1 percent, while the employment population ratio (EPOP) fell to 62.6 percent, the lowest rate since March of 2005.
The job loss in the establishment survey was widely spread across sectors, although construction and manufacturing continue to be hardest hit, shedding 51,000 and 48,000 jobs, respectively. Both residential and non-residential construction are now reducing payrolls, as overbuilding in the non-residential sector is leading developers to cut back in this sector, also. Construction employment is down by 182,000 since November and by 356,000 (4.6 percent) over the last year.
Manufacturing employment is down by 151,000 since November and by 310,000 (2.2 percent) over the last year. The auto sector has been especially hard hit, losing 47,500 jobs since November and 95,000 (9.3 percent) over the last year, although this loss is somewhat inflated by a parts strike last month. The apparel and textile sectors also continue to be big losers, shedding 19,700 jobs since November and 45,700 jobs (8.2 percent) over the last year.
The retail sector lost 12,400 jobs in March and has lost 100,000 since November. Employment in the temporary help sector, which is often an indicator of future job growth, fell 21,600 in March and is down by 55,200 since January. The health care and restaurant industries are the only parts of the private sector with strong job growth, adding 22,800 jobs and 23,400, respectively.
The job growth in the restaurant sector may be an illusion. Over the last four months, the Labor Department has shown a gain of 58,100 jobs. However, the imputation for new firms not captured by the survey has been even larger at 85,000. The Labor Department is imputing jobs in this sector at close to the same rate as it did last year when the economy was growing much more rapidly, which means it is likely overstating job growth.
The data in the household survey reinforce the bleak picture. Nearly every demographic group showed a decline in employment rates and a rise in unemployment rates. Black teens were among the hardest hit groups with their EPOP falling to 19.7 percent, the lowest level since it hit the same number in June of 2003, which in turn was the lowest level since March of 1984.
The unemployment rate for workers without high school degrees jumped 0.9 percentage points to 8.2 percent, the highest rate since October of 2004. The unemployment rate for workers with high school degrees rose by 0.4 pp to 5.1 percent, while the EPOP dropped by 0.6 pp to 59.1 percent. This is the lowest EPOP for workers with high school degrees since the Labor Department changed the coding in the survey in 1992.
The measures of unemployment duration all fell in March, which is consistent with many more workers becoming unemployed for the first time. The number of workers involuntarily working part-time continued its upward path and is now 591,000 above its year ago level. The percentage of unemployment attributable to people voluntarily quitting their jobs, a measure of confidence in the labor market, fell to 10.1 percent, the lowest level since March of 2004.
This report removes any doubt the economy is in a recession, with the private sector now shedding jobs at a rate that may exceed 100,000 per month. With real wages declining, and the plunge in house prices destroying home equity at more than a $2.5 trillion annual rate, it is likely the rate of job loss will accelerate in the months ahead.
80,000 Jobs Cut in March; Unemployment Rate Rises
By Michael M. Grynbaum
The New York Times
Friday 04 April 2008
The economy shed 80,000 jobs in March, the third consecutive month of rising unemployment, presenting a stark sign that the country may already be in a recession.
Sharp downturns in the manufacturing and construction sectors led the decline, the biggest in five years. The Labor Department also said employers cut far more jobs in January and February than originally estimated.
There were fewer jobs in March than there had been five months earlier. In the last 50 years, whenever there has been an employment downturn like the one of the last few months, a recession has followed.
The unemployment rate ticked up to 5.1 percent from 4.8 percent, its highest level since the aftermath of Hurricane Katrina in September 2005. More Americans looked for work than in February, when many simply took themselves out of the job market. But employment opportunities appeared sparse.
Stock markets on Wall Street opened flat, as investors hoped that the worst of the downturn was over.
Economists were less optimistic. The drop in payrolls was worse than feared: many analysts had expected a decline of 50,000 jobs and an unemployment rate of 5 percent.
"Three months in a row of payroll job losses and a sizable negative revision: these are clear signs that the job market is in recession," said Jared Bernstein, an economist at the Economics Policy Institute. "I'm hard-pressed to imagine anyone who would raise doubt to that at this point."
The employment report is considered the most important monthly indicator of the health of the economy. Many economists were already bracing for a poor report, and the chairman of the Federal Reserve, Ben S. Bernanke, told Congress earlier this week that the labor market would continue to soften.
The numbers suggest the Fed will extend its string of rate-cutting when it meets April 29. Investors expect central bankers to lower the benchmark interest rate by at least a quarter point, a move that can stimulate growth.
Wage increases continue to fall behind inflation, meaning many employees are actually earning less than a year earlier. Average hourly salaries ticked up 5 cents, or 0.3 percent, in March, and were running 3.6 percent higher than a year earlier. But consumer prices rose 4 percent over the same period.
In March, private payrolls dropped for a fourth month, as factories, home builders and retail outlets all slashed positions. The only increases came in education and government jobs, as well as the leisure and hospitality industries.
Employers cut 76,000 jobs in January and February, far more than originally estimated.
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Reporting was contributed by Nick Bunkley in Detroit, Carolyn Marshall in San Francisco and Crystal Yednak in Chicago.
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