The rapid pace of U.S. job losses continued in March, according to a Labor Dept. report released Apr. 3, though the monthly decline was not as bad as many on Wall Street had feared.
Nonfarm payrolls declined 663,000 in March, slightly higher than economists' median forecast of a 650,000 decline. The unemployment rate rose to to a 25-year high of 8.5% from 8.1% the month before, about as expected.
"While the data indicates the job weakness continues, the report failed to realize the worst fears of a greater than 700,000 drop in jobs," said Standard & Poor's senior economist Beth Ann Bovino.
While February's 651,000 decline was not revised, January was revised down to -741,000 (from -655,000 previously), the second largest slide on record. Job losses averaged 685,000 in the first quarter.
Looking more closely at the March report, average hourly earnings rose 0.2%. Average weekly hours worked dipped to 33.2 from 33.3. The goods-producing sector lost a total of 305,000 jobs, with a 161,000 decline in manufacturing, and a 126,000 drop in construction. Business services lost 133,000 jobs.
Only the leisure and hospitality sector added jobs -- about 8,000.
The report prompted Action Economics to lower its forecast for first-quarter gross domestic product to -5.0% from -4.5%; Action now assumes a 3.0% drop in the second quarter (revised from -2.5%).
"There is nothing in this report that points to economic recovery," wrote economists John Ryding and Conrad DeQuadros of RDQ Economics in an Apr. 3 note. "The unemployment rate is rising by 0.1% point per week (and the weekly jobless claims data suggest that this continued through the end of the month), while job losses remain staggering (and continue to be revised higher)."
"Our projected 9-1/2% peak in the unemployment rate for this cycle may be too low if the rate of job losses doesn’t slow in the next couple of months," added Ryding and DeQuadros.
Wrote economist Ray Stone of Stone & McCarthy in an Apr. 3 note: "The take-away from the March payroll data is that the end is nowhere in sight."