U.S. job creation slowed by snow

Blizzards blamed for curtailing hiring, construction in March

46,000 new positions

With 4.2% joblessness, `economy is still in very good shape'

April 03, 1999|By BLOOMBERG NEWS

WASHINGTON -- The U.S. economy created 46,000 new jobs last month, fewer than expected and the worst monthly performance in more than three years, the government reported yesterday. Even so, the unemployment rate fell to a 29-year low of 4.2 percent, government figures showed.

The decline from February's gain of 297,000 jobs was attributed primarily to blizzards in many parts of the country, curtailing hiring by construction companies and restaurants, and isn't a sign of a slowdown, analysts said.

"The economy is still in very, very good shape," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Penn.

In another economic report yesterday, the Commerce Department said that the number of U.S. houses, condominiums and apartments completed fell in February from an 11-year high.

Housing completions dropped 6 percent to a seasonally adjusted annual rate of 1.546 million in February after rising 14.2 percent in January to a revised 1.645 million rate. January's rate was the highest since 1.685 million units were completed in July 1987.

Completions tend to lag behind reports of construction starts by about six months. By category, builders put the finishing touches on 1.7 percent fewer single-family homes during February, while completions of apartments and other multifamily units decreased 21.5 percent.

Weather also likely played a role in the decline from February's 4.4 percent unemployment rate. The jobless rate is calculated from a separate Labor Department survey of households that found the number of Americans employed or looking for work fell last month. The number of job seekers should rebound this month as temperatures rise, analysts said.

Last month's job gain was the smallest since the economy lost 48,000 jobs in January 1996 -- after a major blizzard blanketed the East Coast.

It also fell far short of economists' forecast of an increase of 147,000 for the month.

While Naroff said the drop in the jobless rate to the lowest since February 1970 suggests that "there have got to be pressures building," wage gains last month were tempered, as workers' average hourly wages rose 0.2 percent after a 0.2 percent February increase.

Construction employment fell by 47,000, the biggest decline since a 55,000 drop in March 1993, and employment at restaurants and bars fell by 48,000 as Americans stayed home to shovel out.

Manufacturing employment fell by 35,000 last month, surprising analysts who expected factory payrolls to stabilize after falling by 381,000 during the past 12 months. That conflicts with other reports on manufacturing, including yesterday's National Association of Purchasing Management survey, which reported that layoffs were slowing.

"It's entirely possible we're getting such good productivity growth in manufacturing, we don't need to add workers," even as factory output picks up, said Nick Perna, chief economist at Fleet Financial Group in Hartford, Conn.

U.S. productivity, or worker output per hour, grew at a 4.6 percent annual rate in the fourth quarter of last year.

That is four times the average annual productivity growth during the past two decades of about 1.1 percent.

Workers' average hourly earnings, a gauge of business costs, rose 3 cents to $13.09 last month, although Perna said inflation-wary investors should be "a little careful about breaking out the champagne" on that number.

Pub Date: 4/03/99

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