Skilled-Labor Crunch Eases, Fed Finds --- Study Raises the Possibility Of Rise in Jobless Rate From 4.2% in January
WASHINGTON -- Chronic shortages of high-tech and other skilled workers are starting to ease in many parts of the country as layoffs rise and job-hopping abates, a Federal Reserve survey found.</br></br>The findings could mean unemployment, which edged up to 4.2% in January but remained near a 30-year low, could rise further. February's unemployment rate will be released tomorrow.</br></br>The Fed report, known as the "beige book," suggests demand has eased, mostly for the best-paid workers -- those in high-tech, Internet, manufacturing, and construction jobs -- while demand for entry-level, clerical and health workers has remained strong.</br></br>The Fed's policy-making body, the Federal Open Market Committee, uses the report on business conditions around the country to help set the direction for interest rates. The FOMC is expected to cut interest rates by half a percentage point when it meets March 20, an expectation that appeared validated by the Fed report's finding that most regions reported "sluggish to modest economic growth" in February.</br></br>A month ago, a Fed survey found a substantial portion of banks tightening lending standards, a development that could exacerbate the current slowdown. And yesterday, Fed Chairman Alan Greenspan told bankers in a speech that, in their zeal to make up for overly lax lending, they should "not overcompensate and inhibit or cut off the flow of credit to borrowers with credible prospects."