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March jobless rate up to

5.6 pc, jobs grew too

WASHINGTON: The resilient U.S. economy created a higher-than-expected 140,000 jobs in March, but a flood of new job seekers lifted the unemployment rate to 5.6 percent from 5.5 percent, the government said Friday.

Last month's job growth, which would have been greater if not for a now settled strike at General Motors Corp., followed a 12-year high revised payroll gain of 624,000 non-farm jobs in February, the Labour Department said.

"The economy as a whole is pushing ahead, though probably not as fast as these numbers might imply," said economic consultant Robert Dederick of Northern Trust Co. in Chicago.

The department originally estimated February's jobs growth at 705,000 about a month ago, sending stock and bond prices into a tailspin as the sign of economic vigour dashed investor hopes that the Federal Reserve would soon cut interest rates.

Friday's report, the government's first look at business activity in March, sparked another bond selling frenzy because March's job gain was more than twice as great as expected. Stock markets were closed for the Good Friday holiday.

But economists said the report reflects steady economic growth that shows no sign of slipping into a recession, or heating up to a point where the Fed might raise interest rates to ward off the possibility of an uptick in inflation.

"The Fed wrote the script for what we see unfolding in the economy," said economist Allen Sinai of Lehman Brothers. "The markets will question the the possibility of credit tightening. But there will be no tightening."

The central bank has eased credit by cutting short-term rates three times since last July to help buoy the economy. At last month's policy meeting, it kept rates unchanged.

In the first three months of 1996, the number of non-farm jobs grew by an average 206,000 a month, a faster rate than during most of last year, but slower than 1994's pace.

"These numbers, combined with other recent evidence, indicate that the economy is poised to move ahead at a sustainable pace in line with the administration's forecast," said White House economic adviser Joseph Stiglitz.

Also in the first quarter of the year, the civilian labour force -- those with jobs and those seeking work -- swelled by 1.3 million, more than double the increase for all of 1995, including a gain of 637,000 in March to 133.66 million, according to the department's survey of households.

"What that suggests to me is that the unemployment rate has dropped so low that we are pulling more people back into the labour market," said economist Mark Vitner of First Union Corp. in Charlotte, N.C.

Economists said it was an impressive sign of the economy's resilience that, despite the show-stopping "Blizzard of '96" and a government shutdown, it could absorb a flood of new job seekers in the first quarter and maintain the same seasonally adjusted 5.6 percent unemployment rate it had in December.

The ranks of the unemployed rose by 149,000 to 7.5 million in March, while the number of job holders grew by 488,000 to 126.15 million, of whom some 6.3 percent hold more than one job, the department said.

The department estimated that 1.6 million people outside of the labour force want to work but have given up the job search for various reasons, including 451,000 "discouraged" workers who believe there are no jobs available for them.

Last month's job creation was entirely in the service-producing sector, which gained 212,000 jobs, while the number of goods-producing jobs fell by 72,000, according to the department's survey of business payrolls.

March job growth was stunted by the two-and-a-half-week strike at two GM brake plants, which sparked a nationwide shutdown that idled more than 177,000 workers at its peak.

But the manufacturing job market was weak outside of the automobile industry as well, which economists blamed on production slowdowns to work off inventory build-ups, a process they said was nearly complete.

The number of manufacturing jobs fell by 62,000 last month, half of which was attributed to the GM strike. The strike also helped cut the factory workweek by 12 minutes in March to an average 41.4 hours and average weekly overtime by 18 minutes to 4.2 hours, the department said.

The number of construction jobs fell 13,000 in March, retail jobs rose 22,000, and government jobs rose 25,000.

Average hourly earnings of workers in the private sector rose to $11.68 last month from $11.65 in February and were up 3.0 percent from a year ago.

"We are seeing what looks like steady growth in employment in a non-inflationary way," Labour Secretary Robert Reich said in an intereview with Reuters Financial Television. "I don't think we are seeing any wage-push inflation at all.-Reuter