|
U.S. jobless rate steady
|
 |
March 9, 2001: 10:50 a.m. ET
February unchanged at 4.2% as payroll gain is larger than economists expected
|
NEW YORK (CNNfn) - Unemployment remained steady as the U.S. economy created a larger-than-expected number of jobs in February, the government reported Friday, a sign that although growth is slowing the United States does not appear to be slipping into recession.
The world's largest economy created 135,000 jobs last month, the Labor Department report said in its report, well above Wall Street forecasts for an increase of about 75,000 jobs. But that was down from January's revised 224,000, originally reported as 268,000.
The unemployment rate held steady at 4.2 percent.
Analysts said the report means that the Federal Reserve is still likely to cut interest rates again when it meets March 20, though not as aggressively as some on Wall Street had hoped.
"I think these numbers pretty much put a nail in the coffin of the notion that a 75 basis-point (three-quarters of a percentage point) cut will occur," Anthony Chan, chief economist with Banc One Investment Advisors, told CNNfn's Before Hours." I think (Fed Chairman Alan) Greenspan will get his wish for a move at the regular meeting, but they will do a 50 basis-point (half-point) cut."
Manufacturing jobs were among the hardest hit as a slowing economy has led to a slew of earnings warnings and layoffs across the board. Many economists were relieved at the better-than-expected numbers, but said they would keep an eye on the weakness in manufacturing as well as a bigger-than-expected increase in hourly wages for possible signs of inflation.
Average earnings rose 7 cents to $14.10 an hour, the department said in its report, above Wall Street forecasts for an increase of about 4 cents.
U.S. stocks declined after the report, but also were hurt by a warning late Thursday from chip maker Intel (INTC: Research, Estimates), which also said it plans to trim 5,000 jobs.
"Obviously they are above expectations, and also obviously not consistent with an economy that's on the brink of recession," Wayne Ayers, chief economist at Fleet Boston Financial Corp., said of the job numbers. "In a way it's more of the same. We've known anecdotally that there is weakness in manufacturing for some time. This report reiterated that point."
Gains in hiring came at service companies, retailers and health-care providers, and offset a continuing downturn in the manufacturing sector. Labor Secretary Elaine Chao told CNNfn's Market Call she expects the economy to continue its shift to service jobs from manufacturing, and that it is important to provide workers with the proper training to prepare for that shift. She also touted President Bush's tax cut plan as a key to easing the burden on taxpayers.
The House Thursday approved the plan, which includes an across-the-board reduction in income tax rates. Supporters say the cut will give the slowing economy a boost.
Manufacturers, hit particularly hard by the slowing economy, shed 94,000 jobs in February, essentially flat compared with January, the Labor Department said. Taken together, the January and February numbers exceed the total number of manufacturing jobs eliminated in all of 2000.
The February jobs report comes after the Fed slashed interest rates twice in January in a bid to prevent the economy from slipping into a recession. Many analysts believe the central bank will cut rates a third time at its next meeting March 20. But the better-than-expected report left many saying the Fed will cut rates by half a point and not the three-quarters of a point cut some had hope for.
"We do not believe that the economy is in a recession, as payroll employment is not shrinking," Merrill Lynch Chief Economist Bruce Steinberg said in a note Friday. "We continue to think that the Fed will lower interest rates by [half a percentage point] at the March 20 FOMC meeting."
Construction employment rose by 16,000, mirroring the continued strength in the housing market despite the economic slowdown.
Retail employment also increased in February to 37,000 following two months of little change, but the entire sector has lost 60,000 jobs over the last year. The Federal Reserve watches this sector closely since consumer spending accounts for nearly two-thirds of the economy.
-- from staff and wire reports 
|
|
|
|
|
 |
|
