An alarmingly weak employment report from the U.S. Labor Department on March 7 provided fresh evidence that the nation's economy is already in or about to enter a recession.
The Labor Department said Friday that the economy lost 63,000 jobs in February, considerably more than the flat report that had been expected by economists. The number would have been much higher had the government sector not added 38,000 jobs.
The unemployment rate fell 0.1%, to 4.8%, but that was due to shrinkage in the size of the workforce, not more people gaining employment. Average hourly earnings increased 0.3%, or five cents, to $17.80, up 3.7% from February 2007.
Goods producing jobs, comprising the manufacturing and construction industries, lost 89,000 jobs during the month, with construction itself dropping 39,000 from January. Construction has now lost 331,000 jobs since its most recent peak in September 2006.
Losses in the service sector categories of retail and professional/business services were eclipsed by gains in education and health, leisure and hospitality and the aforementioned 38,000 increase in government jobs.
The stock markets initially reacted with a flight from equities. Futures indicated a precipitous drop, but stocks measured by the Dow Jones Industrial Average opened down 130 points. The Dow recovered substantially in the first hour of trading, when it was hovering around a 0.2% drop, slightly less than 25 points. The street was heartened by the notion that the poor employment report opened the door for the Federal Reserve to again slash its benchmark interest rates by at least another 50 basis points when it meets in mid-March, if not before.