86,000 lost their jobs in March

The smell of a recession is in the air, economists say, after report shows the largest loss in a month for 9 years

JOBLESS RATES Details from Friday's unemployment report: The jobless rate for blacks jumped to 8.6 percent in March, from 7.5 percent in February. The rate for Hispanics held steady at 6.3 percent, and the unemployment rate for whites showed no change at 3.7 percent. The jobless rate for adult women fell to 3.6 percent from 3.7 percent in February. The rate for adult men increased to 3.8 percent from 3.5 percent. That marked the highest level since mid-1998. The rate for teen-agers rose to 13.8 percent from 13.6 percent. --------------------------------------------------------------------------------

By Louis Uchitelle NEW YORK TIMES

The nation's employers shed 86,000 jobs in March, the largest loss for a single month in more than nine years and an indication to many economists that the United States may be on the verge of a recession.

The unemployment rate took another tick upward, to 4.3 percent from 4.2 percent in February and 3.9 percent in October, as the Labor Department's job figures, announced Friday, finally reflected the parade of layoffs and hiring freezes since last fall. Job losses in March, as they have been for months, were concentrated in manufacturing. But this time, job gains elsewhere were no longer sufficient to offset the cutbacks.

"This report tells me that the weakness that started in manufacturing is spreading to the rest of the economy," said William Dudley, director of domestic economic research at Goldman, Sachs. "Yesterday, that was a forecast, something we surmised, and today it is in the data."

The March loss was the largest since November 1991, when a still very weak economy was emerging from the last recession and employers eliminated 129,000 jobs. A Labor Department survey of 356 industries last month showed that an increasingly broad array are cutting back on employment. Not since the last recession have the cutbacks been so widespread.

Stock prices, in reaction, fell sharply Friday, with the Dow Jones industrial average declining 1.3 percent, to 9,791,09, and the Nasdaq falling 3.6 percent, to 1,720.36. The market's behavior went against the grain. Stocks usually rise in response to a bad employment report, the belief on Wall Street being that the negative news makes the Federal Reserve more willing to cut interest rates. Lower rates, in turn, make the potential return from stocks more attractive to investors.

The March report indeed raised expectations on Wall Street of lower rates. But this time, the smell of recession seemed to weigh more heavily on the markets. Many Wall Street economists called on the Fed to keep cutting interest rates, until they are down to 3 percent or so, from the present 5 percent level. But there was probably just enough strength -- or ambiguity -- in the March jobs report for the Fed's policy-makers to resist demands for an emergency rate cut ahead of their next scheduled meeting May 15.

"You see some signs of stability," said James Glassman, senior domestic economist for J.P. Morgan Chase & Co. "Hours worked rose a bit, and so did average hourly pay, which suggests that consumer income and consumer spending are holding up. This report by itself fails to justify a quick rate cut."

The Bush administration, citing the jobs report, urged Congress to approve its tax cut proposals. "The new unemployment numbers show that the patient isn't getting any better, so it is time to prescribe some medicine," said Elaine Chao, the secretary of labor.

But others, including several Fed officials, have argued recently that the economy still has strengths, particularly in consumer spending. That view is shared by Chris Varvares, president of Macroeconomic Advisers in St. Louis. "What you count on to stay out of a recession is the consumer holding up," he said. "That may require a stock market rebound, which would be helped by rate cuts."

The biggest job losses were in manufacturing, which shed 81,000 workers last month and has cut a total of 451,000 positions since last June. The other sector hit hard was temporary help, which lost 83,000 jobs and 300,000 since last spring, when the economy first showed signs of slowing. These are the "temps" that employers have used increasingly to fill holes in their staffs. When the cutbacks began, there were 3.5 million in the work force, many of them assigned to factory work.

"Temps are the first to go in a slowing economy," said Thomas Nardone, chief of the Bureau of Labor Statistics, which compiles the employment reports.

Until last month, the suffering in manufacturing and temporary help had been more than offset by employment increases in retailing, wholesale trade, transportation, public utilities, engineering services, consulting and government. In March, however, retailers and wholesalers eliminated jobs. So did government. And the others added fewer jobs than usual.

One of the few remaining sources of strength was construction, which swings widely. But having added 157,000 jobs in January and 7,000 in February, that sector produced a modest 12,000 gain in March.

It is still possible that March might be an exception and April will produce a rosier employment report. But few economists embrace this view. Even Varvares is cautious. "We would have felt better about our no-recession forecast if we had seen a rise in employment along with a rise in hours worked," he said.

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-- Martin Thompson (mthom1927@aol.com), April 07, 2001