The unemployment rate in March rose to 5.1 percent, from 4.8 percent in February, as the ranks of the unemployed rose that month by 434,000, to 7.8 million. Nonfarm jobs in the U.S. declined in March by 80,000, to 137,846,000. In the first quarter of 2008, nonfarm employment was off by 232,000 jobs. A great portion of that loss was in the construction sector, which the Labor Department reports lost 51,000 jobs in March, bringing total construction employment down to 7,338,000. Specialty contractor jobs alone fell that month by 42,000. Construction jobs since September 2006-which is generally considered the housing industry's peak-have fallen by 394,000.
March was a particularly unstable month for America's job seekers, as seasonally adjusted initial jobless claims rose in the week ended March 29 by 38,000, or 10.2 percent to 407,000, the highest level those claims have been at since Sept. 17, 2005, right after Hurricane Katrina hit the Gulf Coast states. The Labor Department reported today that the four-week moving average was 374,500, an increase of 15,750 from the previous week's revised average of 358,750. A year ago, new claims stood at 319,000 for the month ended March 31, which indicates that the employment situation has been eroding.
The one ray of hope for statistics watchers was that retail employment remained essentially unchanged in March. And average hourly wages in all job sectors actually rose in March by 5 cents to $17.86.
The increases in unemployment and initial jobless claims far exceed what experts thought would happen. Bloomberg News polled 40 economists, and their estimates for initial jobless claims ranged from 350,000 to 386,000. Ironically, the Labor Department release comes on the heels of a report two days earlier from Automatic Data Processing (ADP), the largest check-processing company in the U.S., which found that companies in the U.S. private sector added 8,000 jobs in March. When government-related job growth is included in that tally, the ADP report suggests nonfarm payrolls grew by about 33,000 in March, significantly better than the drop of 60,000 expected by Wall Street economists, according to MarketWatch.
Bloomberg suggests that the housing and financial crises are forcing companies to lay off people at higher rates than anticipated. "This is just breaking into recession-type territory," Stephen Gallagher, chief U.S. economist at Societe Generale SA in New York, said in an interview on Bloomberg Television. "400,000 is usually a trigger point when we consider recessionary times."
Some analysts fear that the unemployment rate could be headed towards 5.5 percent by the end of this year, especially given the latest concession by the Federal Reserve's Chairman Ben Bernanke that the country is lapsing into recession. On the day that Labor released its employment report for March, Motorola announced that it was laying off another 2,600 people in the U.S., bringing its total staff cuts of the past 12 months to 10,000.