Interest Rate Roundup

Friday, April 04, 2008

March jobs report: Another stinker

The just-released March jobs report was another stinker -- no two ways about it. Here are the key details:

* Nonfarm payrolls dropped by 80,000, worse than the -50,000 number economists were expecting. February's number was revised to -76,000 from -63,000, while January's was also cut to -76,000 from -22,000. The March figure was the worst since March 2003, when the economy shed 212,000 workers.

* The unemployment rate jumped to 5.1% from 4.8% in February. That's the worst reading since September 2005 (a tie at 5.1%). The unemployment rate hasn't been higher than 5.1% since March 2005.

* By industry, manufacturing lost 48,000 jobs and construction lost 51,000. Retail jobs were down 12,000 ... financial jobs were down another 5,000 ... and temporary help employment was off 22,000. The bright side? Education and health jobs were up 42,000, while leisure and hospitality hiring popped 18,000.

* Average hourly earnings were up 0.3%, in line with estimates. The diffusion index (which measures industries cutting jobs against industries adding them) improved to 47.6 from 43.6 in February. That means job cuts were slightly less widespread by industry than a month earlier.

These figures essentially confirm that the economy is either in recession already, or right on the verge of it. I'm very interested to see how the markets react, however. Credit spreads have been tightening somewhat, Treasury bond prices have been falling, and the stock market tone has improved -- all signs that investors are betting the worst news is behind us. Yet the very latest WEEKLY indicators -- mortgage applications, jobless claims, etc. -- have actually worsened a bit, and there's no evidence of a turn in these March jobs figures. So today could be a real test of the optimistic scenario.


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