Labor Dept. Report Shows Fewer Jobs Lost in April
This marked the fourth straight month of job losses, but the data signaled that perhaps the economy might be resisting falling into recession.
The report from the Labor Department shows that the economy lost jobs for the fourth month in a row, but in April the losses totaled 20,000 — an improvement from the 81,000 jobs lost in March. Job losses for both February and March turned out to be more severe than previously reported.
On Wall Street, reaction to the news was positive as stock prices rose strongly in early trading, building upon Thursday’s Dow close above 13,000. The Dow Jones industrial average was up 91 points in Friday’s early going, the Nasdaq Composite Index was ahead 15 points, and the Standard & Poor’s 500 Stock Index was up 11 points.
“We are in a recession, this report doesn’t change that,” Ellen Zentner, economist at Bank of Tokyo-Mitsubishi, told Bloomberg News. “What it does is support the idea that the downturn will be mild. Consumer spending isn’t going to tank.”
In an interview with Reuters, Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank Private Wealth Management, had a different assessment, saying, “It’s a lot better than expected … it looks like the economy is in better shape than we thought. This will alleviate some of the concerns that we’re in for a steep reduction in employment and a prolonged, drawn-out recession.”
The unemployment rate eased to 5 percent in April from 5.1 in March, against forecasts of a 5.2 percent rate, according to the Associated Press. That number is derived from a separate government survey. That survey also showed more people finding employment than those who didn’t.
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, according to the AP.
But some analysts note that significant weaknesses remain. Home sales and prices have dropped steadily. Feeling pressure from rising fuel and food prices, many households have cut back on other sorts of purchases.
Meantime, the Federal Reserve said it will work with European central banks to expand a series of efforts to deal with the global credit crisis. The Fed will boost the amount of emergency reserves it supplies to U.S. banks to $150 billion in May, up from the $100 billion it supplied in April.
On Wednesday, the Fed cut interest rates by a quarter-point to 2 percent, marking a total drop of 3.25 percentage points since September.