America’s economy added more jobs than expected for the second month in a row in March, even as the unemployment rate inched up 0.1 percentage point to 5.6 percent for the month.
The gain of 140,000 jobs in March came on the heels of a revised increase of 624,000 in February. The March increase would have been even larger if manufacturing employment hadn’t slumped because of a since-settled strike at General Motors Corp. plants.
That news sent U.S. Treasury bond yields soaring — and prices falling — because it suggested the Federal Reserve Board’s next move may be to raise short-term rates to keep the economy from overheating and triggering higher inflation.
“Given the way the market is reacting, there are definitely some traders who are seeing a chance the Fed may be forced to raise rates,” said John Canavan, an analyst at Stone & McCarthy Research Associates, in Princeton, N.J. “Some people are nervous about a possible tightening later in the year.”
U.S. stock exchanges were closed Friday, so there wasn’t a repeat of the 171 point plunge in the Dow Jones Industrial Average a month ago when the February jobs report was released.
Analysts surveyed by Bloomberg Business News expected the Labor Department to report a gain of only 49,000 jobs for March.
Illinois’ unemployment rate for March won’t be issued for another two weeks.
In February, the jobless rate in the state was 5.1 percent; it was 5.3 percent in the Chicago region.
While February’s employment gain was revised down from an initial estimate a month ago of an increase of 705,000 jobs, it still suggests that the economy is gaining more momentum than simply a weather-related rebound.
In fact, job growth averaged 206,000 a month for the first quarter of 1996. That puts it at the high end of economic performances in the last five years.
Monthly job growth averaged 226,000 in last year’s first quarter. For all of 1995, monthly job growth averaged 144,000.
“The economy has begun to move from a creep to a jog — a stately jog,” said Robert Dederick, an economic consultant at Chicago’s Northern Trust Co. While “manufacturing remains a drag on the economy, the service area has been adding significant numbers of jobs,” Dederick said.
A since-ended strike against GM’s brake plants in Dayton, which led to the nationwide shutdown of GM plants, accounted for about half of the 62,000 manufacturing jobs the economy lost during March, the government said.
In other industries, service employment rose by 212,000 in March while construction employment fell by 13,000.
