Employers cut fewer jobs in April
WASHINGTON - May 2, 2008 For the fourth month in a row, the economy lost jobs, the Labor
Department reported Friday. But in April the losses totaled 20,000,
an improvement from the 81,000 reductions in payrolls logged in
March. Job losses for both February and March turned out to be a
bit deeper than previously reported.
The latest snapshot of the nationwide employment conditions -
while clearly still weak - was better than many economists were
anticipating. They were bracing for job cuts of 75,000 and for the
unemployment rate to climb to 5.2 percent.
The unemployment rate, derived from a different statistical
survey than the payroll figures, fell to 5 percent from 5.1 percent
in March. That survey showed more people finding employment than
those who didn't.
Businesses are handing out pink slips as they cope with an
economy that is teetering on the edge of a recession, or possibly
in one already. A severe housing slump, harder-to-get credit and
financial turmoil have forced people and businesses to be more
cautious in their spending. And that has hurt the economy.
To help relieve credit problems, the Federal Reserve announced
Friday that it would boost the availability of short-term loans to
commercial banks to $150 billion in May from the $100 billion
supplied in April. The goal is to supply a source of cash to
squeezed banks so that they'll keep lending to customers.
The Fed took the action and several other moves to boost credit
in coordination with the European Central Bank and the Swiss
National Bank.
In other economic news, the Commerce Department reported that
orders to U.S. factories rose a bigger-than-expected 1.4 percent in
March, after two straight months of declines.
The fresh economic news lifted Wall Street. The Dow Jones
industrials were up in afternoon trading.
On the jobs front, construction companies slashed 61,000
positions in April. Manufacturers cut 46,000 and retailers got rid
of 27,000. Those losses were eclipsed by job gains in education and
health care, professional and business services, the government and
elsewhere.
The job losses came in areas hardest hit by the housing and
credit debacles. The fact that fewer job cuts were ordered in April
raised hopes that damages could be limited.
President Bush expressed hope Friday that the economic-stimulus
rebates beginning to reach taxpayers this week will help lift
activity. "This economy is going to come on. I'm confident it
will," Bush said while visiting a technology plant in a St. Louis
suburb.
Commerce Secretary Carlos Gutierrez, in an interview with The
Associated Press, said the new job figures are "sort of
bittersweet - better than expected but we're still going through a
difficult first half."
Voters are keenly worried about the country's economic problems
and so are politicians - in Congress, in the White House and on the
campaign trail.
There were 7.6 million people unemployed as of April, up from
6.8 million a year earlier.
Workers with jobs saw scant wage gains.
Average hourly earnings for jobholders rose to $17.88 in April,
a tiny 0.1 percent rise from the previous month. That was less than
the 0.3 percent rise economists were forecasting. Over the last 12
months, wages have grown by 3.4 percent.
The weak labor market is making employers feel less generous
with compensation.
Meanwhile, zooming energy and food prices are taking a bite out
of paychecks. If the job market continues to falter, wage growth
probably will slow, too, making people even less inclined to spend.
That would spell further trouble for the economy.
The payrolls figure and the unemployment rate come from two
different statistical surveys, which can provide - as in Friday's
case - a somewhat conflicting picture of what is happening in the
labor market.
The seasonally adjusted overall civilian unemployment rate - 5
percent in April - is based on a survey of 60,000 households. It
showed that 362,000 people said they found employment last month,
outpacing the number of people who couldn't find work.
Economists tend to put more stock, however, in the much broader
business survey of 400,000 work sites that is used to calculate the
payroll figures.
To limit damage to the economy, the Federal Reserve lowered
interest rates on Wednesday, but signaled that its rate-cutting
campaign could be drawing to a close.
The new employment report "will make the Fed feel more
comfortable about the pause in rate cuts ... but can't be taken as
a signal that the economy is out of the woods," said Nigel Gault,
economist at Global Insight.
Fed officials and the Bush administration are hoping that the
Fed's aggressive rate cuts since September plus the government's
$168 billion stimulus package - including tax rebates that started
hitting bank accounts this week - will lift the country out of its
slump in the second half of this year.
Even if that happens, economists predict the unemployment rate
will climb higher, hitting 6 percent early next year.
Employers often are reluctant to beef up hiring until they feel
certain that any such recovery has staying power.
Democrats in Congress insist more relief needs to be provided,
including additional unemployment benefits to cushion the pain of
joblessness. The administration has resisted, saying the rebates
and other stimulative efforts should be sufficient once they fully
kick in.
Sen. Charles Schumer, D-N.Y., said he doesn't want the
administration to view the new employment figures as a "green
light" for not supporting more relief.
Fed Chairman Ben Bernanke and his colleagues acknowledged
Wednesday the fragile state of the economy, saying hiring
conditions "have softened further."
The economy advanced at a snail's pace of just 0.6 percent in
the first three months of this year as people and businesses
clamped down on their spending. It marked the second quarter in a
row of such feeble growth.
A growing number of economists believe the economy is in a
recession and is indeed contracting now.
Under one rough rule, if the economy contracts for six straight
months it is considered to be in a recession. That didn't happen in
the last recession - in 2001- though. A panel of experts at the
National Bureau of Economic Research that determines when U.S.
recessions begin and end uses a broader definition, taking into
account income, employment and other barometers. That finding is
usually made well after the fact.