Jobless rate jump to 8.5 pct dampens rebound hopes

Saturday, April 4, 2009 at 12:32 AM Posted by Beijing News


Another hellish month for the US labor market pushed the unemployment rate to a new 25-year high of 8.5 percent with 663,000 jobs axed in March, official data showed Friday.

The monthly Labor Department snapshot, seen as one of the best indicators of economic momentum, showed widespread losses across most sectors of the economy as the jobless rate rose from 8.1 percent in February.

The report offered no clear signal that the US economy has hit bottom after the worst recession in decades.

"We can't find green shoots of recovery in this report -- though it would not be the first place we'd expect to see them," said IHS Global Insight economist Nigel Gault. "The jobs market will follow rather than lead."

Gault said the report "didn't meet the worst fears, but this is still a very weak report."

Since the recession began in December 2007, a staggering 5.1 million jobs have been lost, with 3.3 million in the past five months, the Department said.

The report was roughly in line with forecasts from private economists, who on average had expected 658,000 job losses and an unemployment rate of 8.5 percent. The rate is the highest since November 1983.

Some said that because the report is backward-looking, or a lagging indicator, it does not reflect other signs that the economy may be poised for recovery.

"The losses continue to be severe but we do see, and I think the market sees, some apparent peaking in the rate of decline, and that stabilization is providing a little bit of cheer to the market," said Peter Kretzmer, senior economist at Bank of America.

"We've moved to a different phase of the business cycle," he said, with consumer spending steadying but companies still cutting investment and inventories.

This suggests "several more months of severe declines before things start to improve," Kretzmer said.

Others noted that the rise in joblessness will further dampen consumer spending, pushing back any recovery.

"While employment is definitely a lagging indicator, the size and speed of the drop in employment will play a major role in the type of recovery we have," said Andrew Busch at BMO Capital Markets.

"It's going to be weaker than normal and likely to be delayed longer as well."

President Barack Obama said the jobs data underlined the need for global economic action.

"Obviously, this is hitting the United States hard," Obama said during a visit to Germany after a crisis summit in London. "If we do not have concerted action, we will have collective failure."

Revised data showed January job losses rose to 741,000, from an earlier estimate of 655,000 lost. The loss for February remained unchanged at 651,000.

"So there is a risk first-quarter GDP could be worse," she said.



show by Swiss National Circus Knie. REUTERS/Arnd Wiegmann

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