The US economy shed 80,000 jobs in March and the unemployment rate ticked up to its highest level since the aftermath of Hurricane Katrina, marking the third consecutive month of rising joblessness and reinforcing fears that the country may already be in recession. Sharp downturns in manufacturing and construction sectors led the decline, the biggest in five years. The drop was worse than many economists had feared.Payrolls fell in January and February, and in Friday’s report, the Labor Department revised those declines even lower. Employers cut 76,000 jobs each of those months, far more than originally estimated.The unemployment rate rose to 5.1 per cent from 4.8 per cent, its highest level since September 2005 amid the aftermath of the Gulf Coast hurricanes. More Americans looked for work than in February, when many simply took themselves out of the job market. But employment opportunities appeared sparse. Economists had been expecting a decline of 50,000 jobs and the unemployment rate of 5 per cent.“Three months in a row of payroll job losses and a sizable negative revision: these are clear signs that the job market is in recession,” said Jared Bernstein, an economist at the Economics Policy Institute. “I’m hard-pressed to imagine anyone who would raise doubt to that at this point.”The employment report is considered the most important monthly indicator of the health of the economy. Many economists were already bracing for a poor report, and the chairman of the Federal Reserve, Ben S Bernanke, told Congress earlier this week that the labor market would continue to soften.The numbers suggest the Fed will extend its string of rate-cutting when it meets on April 29. Investors expect central bankers to lower their benchmark interest rate by at least a quarter point, a move that can stimulate growth.In March, private payrolls dropped for the fourth consecutive month, as factories, home builders, and retail outlets all slashed positions. The only increases were in education and government jobs, as well as the leisure and hospitality industries.Wage increases continue to fall behind inflation, meaning many employees are actually earning less than a year earlier. Average hourly salaries ticked up 5 cents, or 0.3 per cent, in March, and were running 3.6 per cent higher than a year earlier. But consumer prices have risen 4 per cent over the same period.
