Newspaper article THE JOURNAL RECORD

Declining Factory Jobs Lift U.S. Unemployment to 5.5%

Newspaper article THE JOURNAL RECORD

Declining Factory Jobs Lift U.S. Unemployment to 5.5%

Article excerpt

WASHINGTON (AP) _ Unemployment climbed to 5.5 percent in March as factory jobs fell for the first time since 1993. The Clinton administration welcomed the development after a period of torrid growth, but the news rattled the stock market and raised recession worries among some economists.

Shortly after the Labor Department reported Friday that the jobless rate rose from 5.4 percent in February, stocks began to fall. By 2 p.m., the Dow Jones industrial index was down 35.96 points to 4,169.45.

The Treasury's benchmark 30-year bond was off as well, as investors worried about a new slide in the dollar, which set another record low against the Japanese yen.

"I think the stock market is probably worried about the possibility that this soft landing could turn into a hard landing," suggested economist Sung Won Sohn of the Norwest Corp. in Minneapolis.

But many analysts focused on the creation of 203,000 jobs in March amid indications that wage inflation remained in check. Despite the job growth, the unemployment rate rose because more people entered the labor market than found jobs.

"We have hit a glide pattern that is bringing steady job growth without inflation at a relatively low level of unemployment," said Labor Secretary Robert Reich. "We haven't had this good a combination of job growth and non-inflation for several decades."

Lynn Reaser, an economist with First Interstate Bancorp in Los Angeles, said the report and other economic indicators so far this year support "a soft-landing scenario," in which the economy slows to a sustainable rate of growth that will relieve inflationary pressures.

Sohn, the Norwest economist, agreed the economy probably has reached a soft landing, but added, "There is a growing possibility of something more than that."

Alan Davidson, president of Zeus Securities Inc. in Jericho, N.Y., was more emphatic. "We can kiss the soft landing goodbye," he said. "Recession will start within the next six to nine months."

Although there were 203,000 payroll additions in March, the gain was far short of the 345,000 increase a month earlier and about 100,000 below the average of the prior 12 months. …

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