U.S. jobless rate reaches 8.5%

WASHINGTON – “Labor market conditions continued to deteriorate in March,” as non-farm payroll employment shrank for the 15th consecutive month, boosting the jobless rate to 8.5 percent from the previous 8.1 percent, Bureau of Labor Statistics Commissioner Keith Hall told Congress’ Joint Economic Committee this morning.
The March unemployment rate – the highest since November 1983, during the recovery from a recession that had boosted the jobless rate to nearly 11 percent – matched the median forecast from a Bloomberg News survey of 80 economists. (Their estimates ranged from 8.2 to 8.7 percent.)
Non-farm payrolls nationwide shrank by 663,000 jobs last month, after shedding 651,000 jobs in February (READ MORE) and a downwardly revised 569,000 in January. Analysts in the Bloomberg survey had predicted a March drop of 660,000 jobs. (Their estimates for the monthly decline ranged from 525,000 to 750,000 jobs.)
“Since the beginning of the recession in December 2007, job losses have totaled 5.1 million, 3.3 million of which occurred in just the past five months,” Hall said in his monthly Employment Situation address. “These declines have been widespread across industry sectors, but particularly sharp in manufacturing, construction and temporary-help services. Together, these industries have accounted for nearly two-thirds of the job loss during the recession.
“In March, manufacturing employment fell by 161,000, with job losses spread throughout the sector,” while the average work week shrank by 0.2 hours. “Since the start of the recession, manufacturing has shed 1.5 million jobs,” the BLS commissioner said.
“Construction employment declined by 126,000

over the month,” he added. “Since the beginning of the recession, employment has dropped by about 1.1 million.”
Employment also continued to contract “throughout most of the service-providing sector,” Hall said.
“Temporary-help-services employment shrank by 72,000 over the month. Employment in the industry is down by about three-quarters of a million since the recession began. … Other large job losses occurred in retail trade (-48,000); financial activities (-43,000); transportation and warehousing (-34,000); accommodation and food services (-32,000); and wholesale trade (-31,000).”
Government payrolls resumed their decline, shedding 5,000 jobs in March after adding 3,000 in February. But that trend may change as the U.S. Census Bureau begins ramping up for Census 2010. The bureau this month began hiring 140,000 temporary employees, the first installment toward a total of 1.4 million it plans to hire over the next year.
“Health care employment continued to trend up in March, although the pace of job growth appears to have slowed in the past three months. In the first quarter of 2009, the industry added an average of 17,000 jobs per month, compared with a monthly average of 30,000 in 2008.”
The number of people listed as unemployed rose to 13.2 million. “Since the recession began in December 2007, unemployment has surged by 5.6 million,” Hall said. “Job-losers have accounted for about 80 percent of the increase, with returning workers and new entrants to the labor market making up smaller portions.
“In March, the number of individuals experiencing long spells of joblessness rose by 265,000 to 3.2 million. Nearly one in four of the unemployed had been jobless for 27 weeks or more – the highest ratio since mid-1983.
Meanwhile, he said, “the employment–population ratio slipped to 59.9 percent, 2.8 percentage points lower than at the beginning of the recession and the lowest level since July 1985.
“Among the employed, the number of persons working part time who would prefer to be working full time increased by 423,000 over the month to 9.0 million,” Hall said. “Since December 2007, this measure has risen by 4.4 million.”
Despite the employment declines, however, wages for private-sector production and nonsupervisory workers have continued to outpace inflation.
Their average hourly earnings rose 0.2 percent in March – to $18.49 per hour from the previous $18.47 – after rising 0.2 percent per month in both February and January, the BLS said. The average work week shrank 33.2 hours, after holding steady at 33.3 hours for the preceding three months, but average weekly earnings still rose to $614.20 last month from $615.05 in February and a revised $613.72 in January.
“Over the past 12 months, average hourly earnings have increased by 3.4 percent,” Hall noted, while “from February 2008 to February 2009, the seasonally adjusted Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) fell by 0.5 percent.”
Going forward, “The hope and expectation is that things will get a little less dire in the second quarter as various stimulus efforts kick in,” Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. in New York, and a former official in the Federal Reserve System, told Bloomberg News.

Additional information, including the 30-page Employment Situation: March 2009 report and the BLS Commissioner’s Statement on the Employment Situation, is available from the U.S. Department of Labor’s Bureau of Labor Statistics at www.bls.gov.