U.S. Manufacturing Sheds Jobs In March

The manufacturing sector shed 8,000 more jobs in March as the nonfarm U.S. economy created 110,000 new jobs, just half of the 220,000 new jobs that economists generally expected. Most of the jobs lost in manufacturing last month were in apparel, down by 5,000 jobs, and textiles, which lost 2,000 jobs, as both segments "continued to experience long-term job declines," the U.S. Labor Department stated when reporting the March employment numbers on April 1.

"Productivity must be booming in manufacturing-either that or industrial activity is fading away pretty quickly," says Merrill Lynch & Co., New York. "Factory payrolls defied expectations by dropping 8,000 and the manufacturing workweek slid 0.2% for the month-the second month in a row," its analysts note.

The employment news was considerably better in construction and mining, which together with manufacturing and mining constitute the goods-producing segment of the economy. Construction jobs increased by 26,000 in March, following a 31,000 increase in February. With 5,300 jobs added in March, mining employment rose for the fifth consecutive month.

Overall, the U.S. jobless rate fell to 5.2% last month from 5.4% in February, but that's largely because there were 326,000 fewer people in the nation's labor pool in March, figures Merrill. The investment firm characterizes last Friday's Labor Department numbers as "entirely disappointing . . . especially in the context of a business cycle expansion that is well into year number four." Still, its economists do not expect the Federal Open Market Committee to abandon its "measured" tightening of the U.S. money supply anytime soon. "Fed Chairman [Alan] Greenspan et al are likely to look at the average nonfarm payroll numbers over the past three months just a shade below 160,000 and conclude that the labor market is still robust, even if that tally is below the 190,000 average over the prior three months," says Merrill.

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