US jobless figures fall to a three-decade low

THE US unemployment rate dropped to a three-decade low last month, official figures revealed yesterday, although signs of a slowdown elsewhere in the world's largest economy soothed fears of an imminent interest rate rise.

According to figures released by the US Labor Department, the unemployment rate hit 4.2 per cent in March, the lowest since February 1970 and a larger fall than had been expected by the market. The US unemployment rate is now significantly below that of Japan, once seen as the model for the rest of the world.

The rate of unemployment among Hispanics fell to 5.8 per cent, the lowest on record, the figures revealed.

The detail of the monthly jobs report, one of the most market-sensitive pieces of economic data released in the US, revealed that the fall in the unemployment rate was largely due to a fall in the civilian labour force. The US economy added just 46,000 new jobs last month, well below analysts' expectations, and the slowest pace of monthly jobs growth for more than three years.

The weaker-than-forecast jobs growth, combined with a benign set of average earnings numbers, calmed fears that the US Federal Reserve would soon see fit to hike interest rates. A series of extremely strong official figures had recently heightened concerns about a US rate rise. Rate jitters were also sparked on Thursday evening, following the release of February's Fed meeting minutes. These showed that some Fed members had begun to argue for the reversal of the autumn's aggressive string of US interest rate cuts.

US bonds posted their biggest increase for four weeks amid the renewed rate optimism, with the yield on two-year notes falling 7 basis points to 4.94 per cent. US equity markets were closed for the Easter holiday. "There's good news in this report", said Ned Riley, chief investment officer at BankBoston Corp. "It suggests there are little inflationary pressures out there". Greg Jones, chief economist at Briefing.com, said: "Even with tight labour markets. we're seeing no acceleration of inflation."

Despite the weaker-than-expected jobs growth, economists said demand for labour remained strong.

At least part of the weak jobs growth was driven by a statistical anomaly, they said, caused by the fact that this year's hiring trends had not matched the usual seasonal pattern.

"This was the warmest winter since 1895, which made seasonal adjustment a nightmare," said economist David Orr of First Union Corp. in Charlotte, North Carolina.

Manufacturers, many hit hard by the global economic slowdown that began in Asia near two years ago, cut 35,000 jobs last month, bringing the decline for the past year to 381,000.

Construction hiring fell by a seasonally adjusted 47,000 jobs in March after the actual gain in jobs fell short of the normal advance for the start of spring.

Mining, which includes oil-drilling, lost 7,000 jobs in March, bringing losses over the past year to 55,000. Agricultural services and real estate also recorded declines.

Hiring at restaurants and bars fell short of the usual seasonal gains.

However, robust employment growth continued in engineering and management services, health care, educational services and amusement and recreation. There also were gains in computer and data processing and finance and insurance.