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Friday, 6 April, 2001, 15:31 GMT 16:31 UK
Shock fall in US jobs
Dell computer workers in Austin, Texas
Manufacturing has been the hardest hit
US unemployment climbed to 4.3% in March, the highest level in 20 months, as the country's economic slowdown deepens.

Businesses cut 86,000 jobs during the month, the largest reduction in workers on the payroll since 1991.

I think this economy is like the Pillsbury dough boy, it continues to soften

US Labor Secretary Elaine Chao
US Labor Secretary Elaine Chao said the steep loss in jobs pointed to a rising risk of recession -and showed that warnings from the Bush administration about an economic slowdown were realistic.

The Dow Jones Industrial Average fell on the news, shedding more than 150 points in early trading.

'Great concern'

The unemployment rate rose from 4.2% in February, matching analysts expectations, according to Labor department figures.

It last stood at 4.3% in June and July of 1999.

The plunge in payroll numbers - the number people actually in work - marked the first decline since August 2000, when payrolls fell by 79,000.

This is seen as a more relevant indicator of economic health than the unemployment rate, which tends to lag behind the wider US economy.

The surprising elements here are the declines in various service categories

Carol Stone, Nomura Securities
Labor Secretary Chao said the rising jobless total was of 'great concern'.

"I think this economy is like the Pillsbury dough boy, it continues to soften," Chao said, referring to a popular TV ad.

Wall Street analysts had forecast that 58,000 jobs would be created last month, in contrast to the loss actually posted.

Asked if the March data implied a greater risk of recession, Mrs Chao replied: "Yes, these figures do indeed indicate that."

Widespread weakness

There were also signs that the weakness in manufacturing was spreading to the service sector, with more job losses at bars and restaurants, department stores, car dealers and temporary employment services.

The decline in total payrolls followed a 140,000 gain in February, according to revised figures.

The figures will increase pressure on the US central bank, The Federal Reserve, to cut interest rates further, before its next scheduled meeting in May.

The economy is sinking, sinking faster

Roberta Brusca, Global Consulting
Carol Stone, deputy chief economist of Nomura Securities International, in New York, said: "I don't know whether it will be in the next couple of days, but this adds to and brings more force to the argument for an intermeeting rate cut.

"We've been thinking for some months we would get a drop (in employment), and now we have it.

"The surprising elements here are the declines in various service categories.

"This indicates that weakness is occurring in new areas, such as retail.

"A slightly disappointing thing is that wages didn't slow down, but it could mean the declines were concentrated in lower-paying jobs."


Roberta Brusca, chief economist at Global Consulting, says: "This is much weaker than expected, I think this is the kind of number that could give the Fed pause.

We had a number of Fed officials talking yesterday (Thursday) saying they're optimistic, but they're cautious, the risks are on the downside.

"Well guess what - the risks aren't just on the downside.

"The economy's on the downside. The economy is sinking, sinking faster.

"The temporary help that we got from the construction sector looks like it has gone away.

"We don't see a lot of lasting momentum in things like mortgage applications.

"It's a lot of weakness and I would really be looking for the Fed to make an intermeeting move."

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See also:

06 Apr 01 | Business
Wall Street slumps on job fears
05 Apr 01 | Business
US job cuts deepen
02 Feb 01 | Business
US jobless figures start to climb
06 Oct 00 | Business
US jobless at 30 year low
14 Mar 01 | Business
How do world job rates compare?
28 Feb 01 | Business
French jobless hits 10-year low
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