U.S. companies cut 108,000 jobs in March - East Valley Tribune: Business

U.S. companies cut 108,000 jobs in March

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Posted: Friday, April 4, 2003 9:18 am | Updated: 1:06 pm, Thu Oct 6, 2011.

WASHINGTON - U.S. companies slashed 108,000 jobs in March following huge cuts the month before as war in Iraq battered the economy at home. But the overall civilian unemployment rate held steady at 5.8 percent.

Job losses were widespread last month, with few hiring gains, the Labor Department reported Friday.

Analysts had expected more modest job cuts of about 40,000. In February, businesses cut 357,000 positions from their payrolls, more than previously reported.

"I think it's definitely bad news," said Bill Cheney, chief economist at John Hancock Financial Services.

The unemployment rate, which remained unchanged, has hovered around 6 percent since November 2001. The rate is calculated from a survey of households, while the payroll number is derived from a separate survey of businesses. Those two barometers of labor market health can sometimes send mixed signals.

Fewer people looking for work appeared to be a factor in the unchanged rate from February to March. The number of people who said they were no longer looking for employment because they didn't think any jobs were available increased to 474,000 in March, up from 450,000 in February.

More people also are working part-time jobs because they can't find full-time employment. Those workers have increased by half a million in the past year to 4.7 million last month.

The war has stunted any recovery in the near term in the employment market. Even before it started, businesses in this country had been wary of making long-term hiring and spending commitments as the economy struggled in its own right. War made for an even more uncertain economic environment.

Some economists think the dismal outlook could prompt the Federal Reserve to lower a key interest rate from the current 41-year-low of 1.25 at its meeting next month.

A big fear is that the worsening labor market will make consumers, essential to economic activity, more cautious in their spending.

"I think the Fed would be smart to take out insurance" with a rate cut, Cheney said.

After falling into a recession in 2001, the economy has struggled to recover, as three months of economic strength were followed by three months of weakness.

With economists predicting subpar growth for both the first and second quarters of this year, the labor market probably will deteriorate further, economists say.

Job losses continued in manufacturing, which lost 36,000 positions last month. Employment in that sector has fallen by 2.5 million since a peak in April 1998.

The service sector, which is the engine of job growth in the United States, also was hammered last month. That category lost 94,000 jobs in March, following a 256,000 loss in February. Stores, restaurants and bars accounted for much of the loss, along with the struggling airline industry.

Employment also fell last month in government work, with a loss of 40,000 jobs. Most of that occurred in local education.

Construction employment edged up by 21,000 in March following a decline the previous month. The financial industry also was up slightly, bolstered by hiring in mortgage banking. Record low mortgage rates have propelled home sales and refinancing activity, fueling hiring in those areas.

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