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Joblessness dips to 4.2%
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April 2, 1999: 11:07 a.m. ET
Unemployment at 29-year low, while payrolls rise by a small 46,000
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NEW YORK (CNNfn) - The nation's unemployment rate plunged to a 29-year low in March, while the number of jobs created fell to the lowest level in three years, the Labor Department said Friday.
The jobless rate last month dipped to 4.2 from 4.4 percent in February, while 46,000 new jobs were added in March. Wage increases stayed tame.
The monthly employment report, among the most closely watched economic indicators, surprised analysts. Experts forecast unemployment staying unchanged from February, with jobs growing by a much larger 150,000, down from February's 275,000 increase.
The department's average hourly earnings, however, met expectations. They rose 0.2 percent, or 3 cents, to $13.09 in March.
Back to the 70s
The last time joblessness hit 4.2 percent was February, 1970. Richard Nixon led the country, a war raged in Vietnam, and the first man had recently walked on the moon.
Still, some analysts forecast an imminent return to the even lower unemployment of the 1960s.
"We're going to get to a number like 3.8 percent in the next four months," said James Smith, chief economist at the National Association of Realtors. "Jobs are plentiful and easy to get. The economy is strong, no two ways about it."
Blame it on the weather
Analysts linked the low number of jobs created -- 46,000 -- not to economic fundamentals, but to harsh winter weather that slowed the construction industry. It was the lowest number of jobs created since January, 1996, when a major snowstorm immobilized the East. The manufacturing job market contracted for a seventh straight month, decreasing by 35,000 jobs.
The average hourly pay of $13,09, meanwhile, represents a marginal increase and rose little fear of inflation.
Bonds rise
Indeed, bond traders, who often sell on the threat of inflation, began buying bonds after Friday's news. This purchasing spree sent prices higher on the apparent belief that March's low job and pay increases more than offset the strength in the joblessness number. Inflation erodes a bond's value, while its absence makes bonds attractive to investors.
The 30-year U.S Treasury bond, after being up slightly before the release, was recently 1- 4/32 higher, with the yield dropping to 5.589 percent.
These gains come after a week of falling bond prices, triggered by a series of inflation-suggesting reports like Wednesday's Chicago PMI and Thursday's National Association of Purchasing Management index.
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Labor Department
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