Unrelenting jobless rise imperils US recovery
Amid an unrelenting pace of job losses, the US economy faces a race
against the clock as it struggles to recover from its worst slump since
the Great Depression.
Another hellish month for the US labor market pushed the unemployment
rate to a new 25-year high of 8.5 percent with 663,000 jobs axed in
March, official data showed Friday.
While some indicators point to stabilizing or modest growth, the key
labor market continues to shed jobs massively, potentially derailing any
recovery.
Analysts say a recovery will have to take root quickly to steady
employment and avert a further slide in an economic abyss.
“The new optimists who have recently been comforted by a smattering
of better economic reports were given a dose of reality this morning by
the US jobs report, which reminded everybody that an economic recovery
is still, at least, a few quarters away,” said economist Krishen
Rangasamy at CIBC World Markets.
“There are no indications that the US labor market is about to turn
for the better over the coming months. Initial jobless claims remain
consistently above 600,000, and continuing claims are now closing in on
the six million mark.
The jobless rate is set to hit 10 percent before the year is out.”
The monthly Labor Department snapshot, seen as one of the best
indicators of economic momentum, showed widespread losses across most
sectors of the economy as the jobless rate rose from 8.1 percent in
February.
Some point to the fact that new hiring typically lags other factors
in the economic cycle, meaning that the staggering level of job losses
are not as bad they appear on the surface.
“We can’t find green shoots of recovery in this report — though it
would not be the first place we’d expect to see them,” said IHS Global
Insight economist Nigel Gault. “The jobs market will follow rather than
lead.”
Douglas Porter, economist at BMO Capital Markets, agreed that
employment will be among the last major indicator to turn the corner.
“First, sales must revive, and then be sustained, then business will
try to squeeze more out of remaining employees, then add hours to the
workweek, and only then add to payrolls,” he said.
“So, even as jobs spiral lower, another broad array of indicators
this week suggested that the howling recession winds may be easing a
touch.”Porter pointed to improved US auto sales, consumer confidence,
and factory data that moved higher “albeit from desperately weak
levels.”
“Perhaps more important is the sense that aggressive global policy
actions are finally gaining traction,” Porter said.
The Group of 20 summit, he said “managed to produce some real meat,
particularly the hefty increase in IMF resources, which should help
contain the economic damage in the developing world.”
Since the recession began in December 2007, a staggering 5.1 million
jobs have been lost, with 3.3 million in the past five months, the Labor
Department said.
Ethan Harris, economist at Barclays capital, said the economy is
getting a boost from massive stimulus programs from the US government
and central banks, and similar efforts in other countries, but that this
may not be enough if joblessness keeps rising.
- AFP
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