Jobless Rate Dips to 5.1%, but Job Growth Slows
The nation’s overall unemployment rate dipped slightly to 5.1% in March, the Labor Department reported Friday, but a decline in factory jobs suggests that economic growth remains sluggish.
Unemployment, which was 5.2% in February and January, has barely budged in more than a year.
As a result of the latest data, which provides the first significant look at last month’s economic activity, the Federal Reserve Board is likely to maintain short-term interest rates at current levels until a clearer signal emerges of the economy’s direction, analysts said.
“If there were any hawks on the Fed who wanted to raise interest rates, they are now likely to veer back to the status quo,” said Brian Fabbri, chief economist at Midland Montagu Capital Markets in New York.
Only 26,000 people were added to payrolls last month. And the number of non-farm jobs would have fallen for the first time since June, 1986, if the government had not hired tens of thousands of temporary workers to take the census.
The absence of significant job growth followed two months of robust gains that had led some analysts to look for a sharp economic acceleration. But most economists are now convinced that mild weather and other special factors led to artificial employment gains that exaggerated the underlying strength of the economy.
On balance, the U.S. economy added roughly 250,000 jobs a month over the first quarter of 1990. That points to a modest improvement over the weak 1.1% gain in the nation’s output of goods and services during the final period of 1989, when monthly job gains averaged 160,000.
“This report, combined with the earlier figures, is consistent with the 2.5% growth we’re expecting for the first quarter,” said Michael Penzer, an economist for Bank of America in San Francisco. “January and February looked stronger than they really were, so March’s anemic report is the pay-back for that.”
The civilian unemployment rate, which doesn’t count members of the Armed Services, was 5.2% last month, also down 0.1 percentage points from February. In California, the jobless rate rose to 5.2% from 4.9%. All figures are adjusted to reflect normal seasonal factors.
The nation’s manufacturing slump resumed in March after a brief rebound in February due to the return of most auto workers from mass layoffs at the start of the year. The 31,000 factory jobs lost last month left manufacturing employment at roughly 19.4 million, about 250,000 below the level of a year ago.
“Manufacturing is clearly at a steady decline that has continued, even though the rest of the economy is healthy,” said Russell Sheldon, an economist at Mellon Bank in Pittsburgh.
Goods-producing industries, which include factory and construction jobs, experienced a loss of 96,000 jobs in March. But the loss was counterbalanced by an increase of 122,000 service jobs, mostly in government.
