Washington, D.C., Apr. 4--U.S. companies cut 108,000 jobs in March following huge cuts the month before as war in Iraq affected the economy at home. However, the overall civilian unemployment rate held steady at 5.8%, according to the Labor Department.
Analysts had expected more modest job cuts of about 40,000. In February, businesses cut 357,000 positions from their payrolls, more than previously reported.
“I think it's definitely bad news,” said Bill Cheney, chief economist at John Hancock Financial Services.
The unemployment rate, which remained unchanged, has hovered around 6% since November 2001. The rate is calculated from a survey of households, while the payroll number is derived from a separate survey of businesses. Those two barometers of labor market health can sometimes send mixed signals.
Fewer people looking for work also appeared to be a factor in the unchanged rate from February to March. The number of people who said they were no longer looking for employment because they didn't think any jobs were available increased to 474,000 in March, up from 450,000 in February.
The war has stunted any recovery in the near term in the employment market. Even before it started, businesses in this country had been wary of making long term hiring and spending commitments as the economy struggled in its own right. War made for an even more uncertain economic environment.
A big fear is that the worsening labor market will cause consumers, essential to economic activity, to be more cautious in their spending.
After falling into a recession in 2001, the economy has struggled to recover, as three months of economic strength were followed by three months of weakness.
With economists predicting subpar growth for both the first and second quarters of this year, the labor market probably will deteriorate further, economists say.
Job losses continued in manufacturing, which lost 36,000 positions last month. Employment in that sector has fallen by 2.5 million since a peak in April 1998.
The service sector, which drives job growth in the U.S., also was hammered last month. That category lost 94,000 jobs in March, following a 256,000 loss in February. Stores, restaurants and bars accounted for much of the loss.
Employment also fell last month in government work, with a loss of 40,000 jobs. Most of that occurred in local education.
