The U.S. lost jobs for a third consecutive month in March and the unemployment rate rose, signs the economy continues to turn down, economists said before a report today.
Payrolls shrank by 50,000 workers, according to the median estimate of 79 economists surveyed by Bloomberg News before the Labor Department's report. The jobless rate rose to 5 percent from 4.8 percent in February, the survey also showed.
Job losses have shaken consumer confidence, contributing to a weakening in spending that has almost stalled growth. The report reinforces forecasts the Federal Reserve, whose Chairman Ben S. Bernanke this week acknowledged the economy may face a recession, will need to do more to prevent further deterioration.
``Whatever way you slice it, the labor market doesn't feel good for the average person,'' said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York. ``You're seeing the weakness spread more broadly. It's not an abysmal outlook, but it is quite weak.''
Projections in the Bloomberg survey ranged from a decline of 150,000 jobs to a gain of 65,000. The report is due in Washington at 8:30 a.m.
The drop in payrolls would follow a 63,000 decline in February. The last time employment fell for at least three consecutive months coincided with the start of the Iraq War in 2003.
Initial claims for jobless benefits, which track firings, rose last week to the highest level since the aftermath of Hurricane Katrina in September 2005, the Labor Department said yesterday. Payrolls tend to drop as claims rise.
Factory Payrolls
Manufacturers eliminated 35,000 jobs in March, reflecting automakers' efforts to trim costs and the effects of a strike at a supplier for General Motors Corp., economists project the report may show. The last time factories added workers was in June 2006.
A walkout by workers at American Axle & Manufacturing over pay and benefits that started on Feb. 26 has idled almost half of GM's North American workforce. The payroll figures may be reduced by as much as 20,000 workers because of the effects of the strike, according to Morgan Stanley economist David Greenlaw.
Ford Motor Co., which lost $15.3 billion in the past two years, may cut more jobs in North America, Chief Executive Officer Alan Mulally said last month.
``The old ways of doing business are gone,'' Joe Hinrichs, Ford's manufacturing chief, and Marty Mulloy, vice president of labor affairs, said in a March 19 commentary sent to newspapers in communities where Ford has plants. ``We must continue to downsize and simply will not have enough jobs for all of our current hourly workers.''
Subprime's Influence
Job losses in financial markets are also mounting following the collapse in subprime lending.
Wall Street banks affected by mortgage losses and writedowns have cut more than 34,000 jobs in the past nine months, the most since the dot-com boom fizzled in 2001, according to the Securities Industry and Financial Markets Association.
This year, financial firms including Lehman Brothers Holdings Inc., Citigroup Inc. and Morgan Stanley have reduced staff in fixed-income trading, securitization and investment banking. Lehman has eliminated 18 percent of its workforce, Morgan Stanley has cut 6.2 percent, and Merrill Lynch & Co. has trimmed 4.5 percent.
More and more economists are forecasting a recession as job, retail-sales and manufacturing data have deteriorated this year. Martin Feldstein, the Harvard economics professor who heads the research group that determines when downturns begin, said last month that a contraction had started.
Bernanke's View
``It now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly,'' Bernanke said in testimony to Congress on April 2. He said he expected unemployment to move ``somewhat higher,'' in line with recent data showing a ``softer labor market.''
Seeking to ease credit, restore confidence to financial markets and cushion the slowdown, the Fed on March 18 lowered its key rate by three-quarters of a point and vowed to act ``as needed'' to cushion the economy. The Fed has cut the benchmark rate by 3 percentage points since September.
Investors are betting the central bank will need to lower the rate again when it next meets on April 30.
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