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    Friday, April 4, 2008

    Reuters - Economy sheds 80,000 jobs in March

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    Economy sheds 80,000 jobs in March

    Friday, Apr 04, 2008 4:15PM UTC

    By Joanne Morrison

    WASHINGTON (Reuters) - U.S. employers cut payrolls for a third consecutive month in March and the jobless rate jumped to a 2-1/2 year high, adding more evidence that a housing downturn and credit crisis may have pushed the economy into recession.

    The Labor Department on Friday said non-farm employment fell by 80,000 jobs in March, the biggest decline in five years. Financial markets saw the drop as reinforcing the need for further Federal Reserve interest rate cuts.

    It was the first time the U.S. economy shed jobs for three straight months since a five-month string in 2003, when the economy was mired in a jobless recovery from the 2001 recession.

    Adding to the bleak picture, the department said a combined 152,000 jobs were lost in January and February, compared with a previous estimate of 85,000. The unemployment rate jumped to 5.1 percent from 4.8 percent, the highest since September 2005.

    "There doesn't appear to be any silver lining. It shows that we're right in the middle of a recession," said Carl Lantz, U.S. interest rate strategist at Credit Suisse in New York. "Our expectation is that it will be a longer recession than the last two, and we're just in the beginning."

    U.S. stock markets slipped in early trading, while the dollar fell and prices of government bonds rose as traders bet the weaker-than-expected report would lead to more rate cuts.

    "What we have been looking at over the first quarter is an economy that has entered into recession," Bruce Kasman, chief economist at JPMorgan, told clients on a conference call.

    The White House said it was "not happy" with the jobs report, saying it expected growth to be flat in the first quarter, but pick up later in the year.

    RECESSION HERE?

    The U.S. central bank has already lowered rates by 3 percentage points since mid-September to prop up an economy hit hard by a liquidity crisis brought on by what many economists see as the worst housing slump since the Great Depression.

    Fed Chairman Ben Bernanke admitted to Congress this week that a recession was possible. "It's clearly a period of very slow growth extending back to the fourth quarter of last year, and we are trying to set our policies appropriately for that situation," he said.

    A New York Times/CBS News poll released on Friday showed the economy's deepening woes were weighing heavily on the minds of Americans. Of those polled, 81 percent said they believed things were "pretty seriously" on the wrong track, up from 69 percent a year ago and 35 percent in early 2002.

    During the first quarter, job losses averaged 77,000 a month, compared with average monthly gains of 76,000 in the last half of 2007.

    They were widespread in March, with the biggest losses in construction and manufacturing, two areas that have been bearing the brunt of the economy's slowdown.

    Factory employment fell by 48,000, the biggest decline since July 2003, and exacerbated by a 24,000 fall in auto manufacturing jobs that the department said likely reflected the impact of a strike at an auto parts maker.

    Construction employment fell 51,000, the ninth consecutive month of job losses.

    In another sign firms are bracing for a downturn, professional business employment dropped by 35,000, with most of the declines in temporary help services.

    (Additional reporting by Burton Frierson in New York; Editing by Dan Grebler)

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