Sun, Mar 09, 2003 - Page 11 News List

Joblessness rose in the US last month

BAD SIGNS After hearing that over 300,000 jobs were lost, Senate Democratic leader Tom Daschle said the Bush-led economy had now become a `job-destroying machine'

BLOOMBERG , WASHINGTON

The US lost 308,000 jobs last month, the most since the aftermath of the 2001 terrorist attacks, prompting some economists to predict the Federal Reserve will cut interest rates as soon as this month.

The unemployment rate rose to 5.8 percent from 5.7 percent in January, nearing an eight-year high, and hours worked fell, the Labor Department said.

The plunge in payrolls was the most since November 2001 and was four times the lowest prediction in a Bloomberg News economist poll.

Seven of the nine major industries tracked by the government shed workers. JP Morgan Chase & Co and Merrill Lynch & Co predicted the Federal Reserve will cut its benchmark rate by a quarter-point to 1 percent, the lowest since July 1958.

The report "was frighteningly weak, thereby raising the possibility of a double-dip recession," said David Rosenberg, chief North American economist for Merrill Lynch. He put odds of a recession at about 50 percent.

While some economists say a recession that started in March 2001 probably ended later that year, the private economists group that dates business cycles has never called an official end.

The report adds evidence that Congress should pass President George W. Bush's tax-cut plan, Treasury Secretary John Snow said.

Senate Democratic leader Tom Daschle said Bush has turned the economy into a "job-destroying machine" and "simply does not know what it takes to get our economy moving again."

Job creation is at the heart of household spending, which accounts for more than two-thirds of the economy, and 366,000 positions have been eliminated in the last six months.

The decline in payrolls was the biggest since November 2001, when airlines and other companies shed jobs after the Sept. 11 attacks.

Sour notes

* The unemployment rate rose to 5.8 percent from 5.7 percent in January.

* About 366,000 positions have been eliminated in the last six months.

* Employment in service-producing industries, which include retailers, banks and government agencies, plunged by 204,000 last month

* Retailers dropped 92,000 positions, and other services such as restaurants and building maintenance lost 86,000.


Economists had expected payrolls to rise by 10,000 last month following an increase of 185,000 in January, based on the median of 65 forecasts in a Bloomberg News survey. No economist expected payrolls to decline by more than 75,000. Snowstorms along the East Coast, a terrorist alert and reservists called for armed services duty in the Middle East may have also depressed payrolls, economists said.

Dead in the water

"This is an indication of an economy that is close to dead in the water," said Peter Hooper, chief US economist at Deutsche Bank Securities, who had forecast a 75,000 decline in payrolls.

"It's going to continue to look weak until geopolitical uncertainties are resolved."

Employment in service-producing industries, which include retailers, banks and government agencies, plunged by 204,000 last month, the biggest decline since November 2001, after rising 166,000 the previous month. Retailers dropped 92,000 positions, and other services such as restaurants and building maintenance lost 86,000.

Construction employment fell by 48,000 in February after rising 26,000 a month earlier.

Manufacturers eliminated jobs for the 31st straight month.

Factories dropped 53,000 jobs last month, after cutting 4,000 the month before. The manufacturing workweek held at 40.8 hours, and overtime rose to 4.2 hours from 4.1 hours.

The payroll total may have been depressed by the activation of civilian workers for military duty. The US ordered 91,358 reservists to mobilize from mid-January to mid-February, accounting for more than half of the 150,252 called up by Feb. 12, the week when the Labor Department conducted its payroll poll.

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