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A CRAZY JOBS REPORT

NEW YORK, March 8 /PRNewswire/ -- The following was released today by CS First Boston:

"What a difference a month makes," remarked Rosanne M. Cahn, Chief Economist, Equity Department, CS First Boston. "While February's one-month increase of 705,000 jobs included some rebound from the weather-depressed January, which showed a decline of 188,000, it generally looked too peculiar to be believable. The average rise of 258,000 in the two months was double the average monthly increase during 1995 and approaching the rapid 1994 pace."

"Has the economy picked up as much as the report implies? The composition suggests that is unlikely."

-- "The cyclical manufacturing sector would be a reliable indication that the economy is picking up in a fundamental rather than statistical sense. However, manufacturing employment rose a scant 26,000 in February after a 75,000 drop in January, or an average decline of 24,000, similar to the past year. The National Association of Purchasing Management data for the manufacturing sector also remained weak in the January/February period."

-- "Within the construction industry, special trade contractors who do interior work and additions and alterations added 77,000 workers in February, almost seven times as many as the average monthly gain in the prior year. Fixing storm-related damage was a one-time boon to those workers."

-- "The retail trade industry, which is downsizing, added about half as many workers in February as in the prior year!"

-- "The rise in temporary help jobs in February accounted for all of the increase in the past year!"

"Concern about recession that developed toward the end of 1995 was excessively pessimistic, but using such volatile data as the February employment report to conclude that the economy is starting to pick up strongly would be a mistake. Sluggish growth, perhaps including modest acceleration, is a more reasonable assessment of the economy, taking other information into consideration."

"The Fed will not ease at the next meeting on March 26 in the face of such a strong jobs data point, even though it is not to be trusted. Whether the Fed eases at the next meeting on May 21 will depend upon the run of data at that time."

"The runup in bond yields in the past month jeopardizes whatever strength exists in the economy. Falling mortgage rates had underpinned a housing recovery and a surge in refinancing activity, which will now be cut off. Consumer spending will not be robust enough in the face of rising bond yields to take up the slack. Economic growth might be higher than expected for awhile, but will recede if the bond market does not rally to lower yields."
 -0- 3/8/96


/CONTACT: Rosanne M. Cahn, Chief Economist, Equity Department of CS First Boston, 212-909-4729/ CO: CS First Boston ST: New York IN: FIN SU:

TP-DC -- NYF031 -- 1653 03/08/96 14:22 EST
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Publication:PR Newswire
Date:Mar 8, 1996
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