Business | Economy
Soaring jobless rate 'confirms US is in recession'
US employers cut payrolls for a third consecutive month in March and the jobless rate jumped to a two-and-a-half year high, adding more evidence that a housing downturn and credit crisis
- Reuters
- Published: 23:32 April 4, 2008
Washington: US employers cut payrolls for a third consecutive month in March and the jobless rate jumped to a two-and-a-half year high, adding more evidence that a housing downturn and credit crisis may have pushed the economy into recession.
The Labour Department on Friday said non-farm employment fell by 80,000 jobs in March, the biggest decline in five years. Financial markets saw the drop as reinforcing the need for further Federal Reserve interest rate cuts.
It was the first time the US economy shed jobs for three straight months since a five-month string in 2003, when the economy was mired in a jobless recovery from the 2001 recession.
Adding to the bleak picture, the department said a combined 152,000 jobs were lost in January and February, compared with a previous estimate of 85,000. The unemployment rate jumped to 5.1 per cent from 4.8 per cent, the highest since September 2005.
"There doesn't appear to be any silver lining. It shows that we're right in the middle of a recession," said Carl Lantz, US interest rate strategist at Credit Suisse in New York. "Our expectation is that it will be a longer recession than the last two, and we're just in the beginning."
US stock markets slipped in early trading, while the dollar fell and prices of government bonds rose as traders bet the weaker-than-expected report would lead to more rate cuts.
"What we have been looking at over the first quarter is an economy that has entered into recession," Bruce Kasman, chief economist at JPMorgan, told clients.
The White House said it was "not happy" with the jobs report, saying it expected growth to be flat in the first quarter, but pick up later in the year.
A New York Times/CBS News poll released yesterday showed the economy's deepening woes were weighing heavily on the minds of Americans. Of those polled, 81 per cent said they believed things were "pretty seriously" on the wrong track, up from 69 per cent a year ago and 35 per cent in early 2002.
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