US firms cut 80,000 jobs in March

US EMPLOYERS cut more jobs in March than at any other time in the past five years, reinforcing the view that the US is in recession and raising fears about consumer spending.

The weaker-than-expected figures and jump in the unemployment rate will maintain pressure on the US Federal Reserve to cut interest rates by about 50 basis points at its next policy meeting, even though policymakers remain concerned about inflation.

Non-farm payrolls dropped 80,000 last month, the third consecutive month that the labour market has contracted and the steepest drop since March 2003.

The market was expecting the loss of about 50,000 jobs.

The US Bureau of Labor Statistics revised upwards its estimate of job losses in January and February. The new figures show the US has lost between 76,000 and 80,000 jobs every month since the start of this year and 232,000 jobs in total during the quarter.

The unemployment rate moved up sharply from 4.8 per cent to 5.1 per cent in March, suggesting growing slack in the economy.

John Ryding, chief US economist at Bear Stearns, said: "This magnitude of a rise in the unemployment rate has never occurred in the postwar period without the economy being in recession."

However, the size of the job losses was not large by the standards of past recessions and, surprisingly, hours worked moved up.

Michael Feroli, an economist at JP Morgan, said it was consistent with a "mild start to a recession".

US firms did not add as many workers during the latest upswing as in past cycles, suggesting they may not be as quick to shed workers during the downturn.

Job losses in March were concentrated in the construction, manufacturing and employment services sectors. The car sector also saw a sharp decline in employment, reflecting the impact of a strike.