Economy lost 108,000 more jobs in March

Loss climbs to 465,000 in the past two months

`There is really no job creation'

Analysts are surprised employment didn't grow

April 05, 2003|By Bill Atkinson | Bill Atkinson,SUN STAFF

The nation's unemployment rate held steady at 5.8 percent in March, but the job market continued to show the stresses of a weak economy and war as a broad base of employers slashed thousands of workers from their payrolls, the Labor Department reported yesterday.

Employers ranging from manufacturers, retailers and hotels to state and local governments chopped payrolls by 108,000 in March. The Labor Department also raised the number of jobs lost in February to 357,000, 16 percent greater than it initially reported, bringing the total for the past two months to 465,000.

"There is really no job creation," said Sharon Stark, chief fixed-income strategist at Legg Mason Wood Walker Inc. in Baltimore. "The report isn't catastrophic, but it does signal the softness of the economy. The message there is that the pace of job losses has slowed, but the pace of job creation has also slowed at a great rate."

Only six months out of the past 24 have registered employment gains.

According to the Labor Department report, 8.4 million unemployed are actively looking for work.

In addition, the number of people who had looked for a job sometime in the previous 12 months but not in the four weeks prior to the survey increased 14 percent, to 1.6 million from a year earlier.

"The economy was quite weak in March," said Gary Thayer, chief economics at A.G. Edwards & Sons Inc. in St. Louis. "There was a lot of concern about the war prospects, there was lot of pressure because of the higher cost of fuel. These are factors that definitely contributed to weaker employment numbers."

The employment cuts surprised John E. Silvia, chief economist at Wachovia Corp., a Charlotte, N.C.-based banking company, who had expected employers to add 25,000 jobs.

"I did expect a bounce-back," Silvia said. "The fact that we didn't get a bounce-back suggests to me that there is weakness longer term."

Silvia and other economists also were surprised that job losses infected a wide range of sectors.

For example, the Labor Department report found in March that:

The service industry, a segment that encompasses a broad range of workers from finance to transportation, lost 94,000 jobs.

Retail trade employees, who work in restaurants, car dealerships and general merchandise stores, lost 43,000 jobs.

Manufacturers, which have slumped for years, shed 36,000 jobs and have turned out 2.5 million workers since April 1998.

Government, which added to payrolls over the past two years, shaved 40,000 workers.

Construction was one of the exceptions, adding 21,000 workers for a total of 6.5 million.

As more people become unemployed, it also is taking longer to find jobs, yesterday's report said. About 1.9 million people have been without a job 27 weeks or longer, compared with 1.4 million a year earlier.

"People are finding jobs, but the search times that it takes them to find jobs are up," said John A. Challenger, chief executive of Challenger, Gray & Christmas Inc., a Chicago outplacement firm.

Challenger said that in the fourth quarter it took an average of 3.87 months for a person to find a job, up from the typical 3.2 months.

A greater number of people are also taking jobs that they wouldn't normally accept, he said.

Many economists expect the nation's unemployment rate to rise in the months ahead as the economy muddles along. Consumers, the engine that has propelled the economy, have pulled back and businesses have put expansion plans on hold because of the war with Iraqi.

"There is a lot more weakness out there than just the war," Silvia said. "Consumers are just not spending as much as people expected."

Thayer, however, believes unemployment is near its high, and could fall to 5.4 percent by the end of the year.

He said the economy has been held back by rising oil prices and the war. But the price of oil is falling, he said, and consumers may soon "begin to realize that the worse case scenario in the war is not developing."

Challenger is more pessimistic because economists have been saying the recovery is at hand for the past two years.

"I worry that the problems are deeper than just the war," Challenger explained. "We have been thinking a turnaround was just around the corner for a couple of years. The war is just the latest corner."

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