Unemployment Rate Steady But Payrolls Still Shrinking

April 4, 2003 (PLANSPONSOR.com) - The struggling US job market shed a much higher than expected 108,000 nonfarm jobs in March in a continuing sign that the economy is still fragile amid the many uncertainties of the Iraq war.

According to a closely-watched US Department of Labor (DoL) report, the nation’s jobless rate clung to the 5.8% mark – despite predictions that it would creep higher from February’s unemployment measure.

The job loss was much worse than anticipated by economists in Reuters’ regular survey; the analysts had projected a 29,000 March decrease. However, March’s 108,000-job drop was not nearly as dire as the staggering 357,000 positions the bleeding economy threw off in February (See Grim February Employment Picture Shows 308,000 Job Losses ).   The February jobs drop was revised from a previously reported 308,000 decline.

Job losses cut across a variety of economic sectors. One of the few categories to show an increase was construction, where jobs rose by 21,000 in March. In addition, a booming industry for mortgage applications help fuel a 12,000 gain in the sector of finance, insurance and real estate. Manufacturing jobs slumped by 36,000, while transportation payrolls dropped 13,000.

The DoL said that the February report and, to a lesser extent, the March report were affected by the call up of military reservists to active duty for the war in Iraq. But DoL officials said they have not been able to quantify the impact.

Another sign that the US job market is yet to move to a recovery stage came from the March report from outplacement firm Challenger, Gray & Christmas, which found that March planned layoffs were down 38% but companies still weren’t hiring (See Challenger: Fewer March Layoffs Didn’t Produce More Hiring ). Finally, the DoL reported this week that the number of Americans applying for first-time unemployment benefits skyrocketed to 445,000 – its highest level in almost a year (See  Jobless Claims Spike Higher to 445,000  ).