U.S. sheds fewest jobs in 6 months
WASHINGTON (Reuters) - U.S. employers cut 539,000 jobs last month, the fewest since October, according to government data on Friday that signaled the economy's steep decline might be easing and gave the stock market a boost.
The unemployment rate, however, soared to 8.9 percent, the highest since September 1983, from 8.5 percent in March, and job losses in March and February were a combined 66,000 steeper than previously estimated, the Labor Department said.
A 72,000 jump in government payrolls tempered the overall job-loss figure. Government employment was bolstered by the hiring of about 60,000 temporary workers in preparation for the 2010 census and U.S. Labor Secretary Hilda Solis said this figure would fluctuate in the months ahead.
Private sector employment fell by 611,000 in April after a 693,000 decline in March, the department said, which curbed some of the optimism over the report.
Still, the data was not as bleak as financial markets had expected and offered the freshest sign that the intensity of the recession, now in its 17th month, was starting to fade.
"The labor report added to the growing list of data points that imply that the steepest part of the economic contraction is now past," said Brian Fabbri, chief North America economist at BNP Paribas in New York.
The payrolls reading, which beat market forecasts for a 590,000 drop, and results of the government's tests on the health of the 19 biggest domestic banks buoyed U.S. stocks.
The Dow Jones industrial average ended up 1.96 percent at 8,574.65. Government bond prices ended higher as unemployment was seen still rising well into 2010.
President Barack Obama, whose government has rolled out a record $787 billion rescue package of spending and tax cuts, said April's payrolls number was somewhat encouraging, but that the job losses were still a sobering toll.
"It underscores the point we're still in the midst of a recession that was years in the making and that is going to be months or even years in the unmaking. We should expect further job losses in the months to come," Obama said.
Since the start of the recession in December 2007, the U.S. economy has lost 5.7 million jobs, the Labor Department said.
In neighboring Canada, a surprise 35,900 jobs were added to payrolls in April, confounding analysts who had expected the economy to extend its pattern of heavy job losses.
GLIMMERS OF HOPE
In a hopeful glimmer for the U.S. economy, the rise in the unemployment rate reflected a surge in people joining the labor force, as opposed to a collapse in employment. The report showed job losses across almost all sectors, although at a less steep pace than in previous months.
Manufacturing lost 149,000 jobs in April after shedding 167,000 in March. Economists were heartened by a slight increase in hours worked in manufacturing, where the average work week inched up to 39.6 hours from 39.4 in March.
"The very good news is that the hours in the manufacturing sector were up, which implies that we are going to have some production increases soon, if not in April for industrial production, perhaps in June at the latest," said Kurt Karl, chief U.S. economist at Swiss Re in New York.
Government data last week showed a record $103.7 billion drawdown in inventories in the first quarter. Analysts reckon this created a platform for a recovery in manufacturing.
Construction, among sectors hit hardest by the housing-led recession, shed 110,000 jobs in April, the Labor Department said, after losing 135,000 the previous month.
The service-providing industry slashed 269,000 positions after cutting 381,000 in March, while in education and health services they rose 15,000 after increasing 10,000 in March.
Despite the slowdown in the pace of job losses, the unemployment rate will continue to rise until at least the first quarter of 2010, peaking anywhere between 9.5 and 10.5 percent, according to economists.
"It does look as if we are falling more slowly and we are likely to hit bottom reasonably soon, at least when it comes to economic growth," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania, but added:
"We are looking at rising unemployment rates for quite some time even as job losses moderate."
The length of the average work week was unchanged at 33.2 hours in April. Average hourly earnings edged up to $18.51 from $18.50 in March, which analysts said was a reminder that incomes remained under pressure.
"The figures gave a cautionary warning about consumer incomes," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.
"(The modest rise in) hourly earnings, which combined with the heavy loss of jobs signals a continuing decline in overall wage and salary incomes, is bad news for purchasing power."
A separate report from the Commerce Department showed wholesale inventories dropped 1.6 percent to $411.7 billion, the lowest since November 2007, after falling a record 1.7 percent in February.
(Additional reporting by Lisa Lambert and Doug Palmer; Editing by James Dalgleish)
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