Jobs Down in April, But Better Than Expected
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Employers cut jobs for a fourth straight month in April but not as vigorously as feared, according to a government report on Friday that also showed an unexpected improvement in the unemployment rate last month.
The Labor Department said 20,000 jobs were shed last month, far fewer than the 80,000 that economists anticipated would be lost. The report buoyed stock futures prices and sent the dollar's value higher.
Bond prices weakened broadly as investors bet the jobs number reduced chances for more interest rate cuts by the U.S. central bank.
April's job reductions followed upwardly revised losses of 81,000 jobs in March and 83,000 in February. Employers also cut 76,000 jobs in January.
The national unemployment rate eased to 5 percent from 5.1 percent in March, contrary to forecasts that it would pick up to 5.2 percent.
Though the losses in jobs last month were less than forecast, they nonetheless represent continued deterioration in hiring prospects. The four-month string of monthly losses is the longest since a five-month stretch in 2003, when the economy was still in a so-called jobless recovery from the last recession in 2001.
The moderation in the pace of losses may reinforce chances that the Federal Reserve, which cut official interest rates again earlier this week, will be able to pause its rate-slashing campaign.
"It looks like the economy is in better shape than we thought," said Owen Fitzpatrick, head of the U.S. equity group for Deutsche Bank Private Wealth Management in New York. "I think a lot of people were expecting it to be a lot worse."
John Silvia, an economist with Wachovia Bank in Charlotte, N.C., said the jobs data gave the Fed some breathing-room to assess the impact of substantial rate cuts it already has made.
"I think the employment decline was less than expected and consistent with a modest slowdown in the U.S. economy, possibly a recession, and I think it will allow the Fed time to look at the data going forward," Silvia said.
Just before the April employment figures were issued, the Fed announced fresh action to add liquidity to credit markets, increasing the size of some cash auctions for financial institutions as well.
The economy so far has skirted outright contraction, although it expanded only at a slim 0.6 percent annual rate in the first quarter. Some officials are sounding cautiously optimistic that the worst of a credit market crisis may be past despite persistent weakness in some sectors like housing..
The Labor Department said 61,000 construction jobs were lost in April, the largest number for that sector since 103,000 were cut in February 2007. The department said that since peaking in September 2006, some 457,000 construction jobs have been lost.
Goods-producing businesses cut 110,000 jobs in April, the largest number of job reductions since January 2002, after trimming 88,000 in March. But service industries added 90,000 jobs - the most since last December - with most of them coming in the health care and professional technical services sectors.
Both the number of hours worked and overtime hours weakened slightly in April from March, a sign employers were making every effort to keep a tight lid on employment costs.