WASHINGTON (AP) - 0502b--economy
0502dv--bush--econ
Employers cut far fewer jobs in April than in recent months and the
unemployment rate dropped to 5 percent, a better-than-expected showing that
nonetheless reveals strains in the nation's labor market.
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.
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