WASHINGTON–The United States’ unemployment rate jumped to 8.5 per
cent in March, the highest since late 1983, as a wide range of
employers eliminated a net total of 663,000 jobs.
The Labour
Department’s report is fresh evidence of the toll the recession has
inflicted on America’s workers and companies. Most economists expect
the job cuts will continue for much of this year.
The latest
tally of job losses, released Friday, was slightly higher than the
654,000 that economists expected. The rise in the unemployment rate
matched expectations.
Since the recession began in December
2007, the economy has lost a net total of 5.1 million jobs, with almost
two-thirds of the losses occurring in the last five months.
The
number of unemployed people climbed to 13.2 million in March. In
addition, the number of people forced to work part time for “economic
reasons” rose by 423,000 to 9 million. That’s people who would like to
work full time but whose hours were cut back or were unable to find
full-time work.
If part-time and discouraged workers are
factored in, the unemployment rate would have been 15.6 percent in
March, the highest on records dating to 1994.
Looking forward, economists expect monthly job losses continuing for most – if not all of – this year.
However, they are hoping that payroll reductions in the current quarter
won’t be as deep as the roughly 685,000 average monthly job losses in
the January-March period.
In the best-case scenario, employment
losses in the present quarter would be about half that pace, some
economists said. That scenario partly assumes the economy won’t be
shrinking nearly as much in the present quarter.
The
deterioration in the jobs market comes despite a few hopeful signs
recently that the recession – now the longest since the Second World
War – could be easing.
As the economic downturn eats into their
sales and profits, companies are laying off workers and resorting to
other cost-saving measures. Those include holding down hours, and
freezing or cutting pay, to survive the storm.
The average work week in March dropped to 33.2 hours, a new record low, according to the federal data.
Job losses were widespread last month. Construction companies cut
126,000 jobs. Factories axed 161,000. Retailers got rid of nearly
50,000. Professional and business services eliminated 133,000. Leisure
and hospitality reduced employment by 40,000. Even the government cut
jobs – 5,000 of them.
Education and health care were the few industries showing any job gains.
Federal Reserve Chairman Ben Bernanke said the recession could end
later this year, setting the stage for a recovery next year, if the
government is successful in bolstering the banking system. Banks have
been clobbered by the worst housing, credit and financial crises to hit
the country since the 1930s.
Even if the recession ends this
year, the economy will remain frail, analysts said. Companies will have
little appetite to ramp up hiring until they feel the economy is truly
out of the woods and any recovery has staying power.
Given that,
many economists predict the unemployment rate will hit 10 per cent at
the end of this year. The Fed says unemployment will remain elevated
into 2011.
Economists say the job market may not get back to normal – meaning a 5 per cent unemployment rate – until 2013.
“There’s going to quite a long haul before you see the jobless rate
head down,” said Bill Cheney, chief economist at John Hancock Financial
Services.
To brace the economy, the Fed has slashed a key bank
lending rate to an all-time low and has embarked on a series of radical
programs to inject billions of dollars into the financial system.
And the Obama administration had launched a multi-pronged strategy to
turn the economy around. Its $787 billion stimulus package includes
money that will flow to states for public works projects, help them
defray budget cuts, extend unemployment benefits and boost food stamp
benefits.
The administration also is counting on programs to
prop up financial companies and reduce home foreclosures to help turn
the economy around.
On the economic front, some glimmers of hope have emerged recently.
Orders placed with U.S. factories actually rose in February, ending a
six straight months of declines, the government reported Thursday.
Earlier in the week, there was better-than-expected reports on
construction spending and pending home sales. And last week a report
showed that consumer spending – an engine of the economy – rose in
February for the second month in a row – after a half-year of declines.
Still, skittish employers announced more job layoffs this week.
3M Co., the maker of Scotch tape, Post-It Notes and other products,
said it’s cutting another 1,200 jobs, or 1.5 per cent of its work
force, because of the global economic slump. Fewer than half the jobs
will be in the U.S., but include hundreds in its home state of
Minnesota. The 1,200 figure includes cuts made earlier in the first
quarter.
Elsewhere, healthcare products distributor Cardinal
Health Inc. said it would eliminate 1,300 positions, or about 3 percent
of its work force, and semiconductor equipment maker KLA-Tencor Corp.
said it will cut about 600 jobs, or 10 per cent of its employees.
