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WASHINGTON - Opening up the available workforce for a variety of industries, the U.S. unemployment rate climbed to 4.3 percent in March, the highest level in 20 months, as businesses cut 86,000 jobs. The payroll reduction was the largest since November 1991, when payrolls plummeted by 94,000.
The Labor Department reported today, April 6, 2001, the one-tenth of a percentage point rise from the 4.2 percent jobless rate in February. The unemployment rate last stood at 4.3 percent in June and July of 1999.
The plunge in payrolls last month marked the first decline since August 2000, when payrolls fell by 79,000. The weakness was widespread, with losses at bars and restaurants, department stores, car dealers and temporary employment services. But manufacturers continued to be the hardest hit. The decline in total payrolls followed a 140,000 gain in February, according to revised figures.
Manufacturing, which has been bearing the brunt of the economic slowdown, lost 81,000 jobs last month, with cuts affecting a wide range of industries - from industrial machinery production to auto manufacturing. Since last June, lost factory jobs totaled 451,000.
Seeking to prevent the economy from toppling into recession, the Federal Reserve has cut interest rates three times this year, totaling 1.5 percentage points. Economists expect another cut before or at the Fed's next scheduled meeting on May 15 and are hoping aggressive action by the central bank will allow the country to skirt a full-blown downturn.
The Fed's rate reductions are designed to rejuvenate economic growth. But President Bush says more needs to be done, namely quick enactment of his $1.6 trillion tax cut.
Economic growth slowed to an annual rate of just 1 percent in the last three months of 2000, the weakest performance in more than five years.
The unemployment rate dropped to a 30-year low of 3.9 percent during three months of last year, reflecting the strength of the red-hot economy during the first half of 2000. However, with the slowdown, economists are forecasting the jobless rate to rise in the coming months, peaking at around 4.5 percent.
Average hourly earnings, a key gauge of inflation, rose in March by 0.4 percent to $14.17 an hour, slightly faster than many analysts were expecting, but down from a 0.6 percent increase the month before. The length of the average workweek edged up to 34.3 hours from 34.2 hours in February.
The service sector, normally the engine of job creation in the United States, actually lost jobs last month, with employment falling by 19,000. A huge drop of 83,000 jobs was reported for temporary help firms, which has seen employment fall for six straight months, losing 273,000 jobs over that period.