Unemployment Rate Edges Up To 4.5% In April
Friday, May 4th 2007, 8:41 am
By: News On 6
WASHINGTON (AP) _ The nation's unemployment rate edged up to 4.5 percent in April as cautious employers added the fewest new jobs in more than two years, signaling that the labor market is starting to feel some of the strain of the sluggish economy.
The fresh employment picture provided by the Labor Department on Friday showed that payrolls grew by just 88,000 last month as job losses spread beyond manufacturing and construction and into retailing and financial services. Workers' paycheck also grew more slowly.
The new tally of jobs added to the economy was the fewest since 65,000 jobs were added in November 2004. The rise in the unemployment rate, however, was slight compared with March's 4.4 percent rate _ which had matched a five-year low. Taken together the figures suggest the labor market may be cooling a bit _ but not collapsing _ as the national economy makes its way through a soft patch.
Given the housing slump, rising energy prices and slowing overall economic activity, ``companies are being conservative when it comes to their new hiring,'' said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group. ``Job seekers will need to have good resumes,'' she added.
Still, from the overall economic perspective, the slight slowing in hiring isn't worrisome, she said. ``The numbers suggest some of the slowing in the economy is spilling over into the labor market but not in a major way,'' Reaser said.
Economists were predicting the unemployment rate would nudge up to 4.5 percent. However, they expected job growth to be a bit stronger, with employers adding around 100,000 new jobs to their ranks. Even with the fractional rise in the overall rate, joblessness in the 4 percent to 5 percent is relatively low by historical standards.
The new report also showed that job gains in February and March turned out to be a bit weaker than previously reported.
Employers added 90,000 positions in February, versus the 113,000 reported last month. Payrolls grew by 177,000 in March, slightly less than the 180,000 previously reported.
Workers' wages grew more slowly.
Average hourly earnings rose to $17.25 in April, a 0.2 percent increase from March. Economists were expecting a modest 0.3 percent rise. Over the past 12 months, wages grew by 3.7 percent, the slowest annual increase in a year.
Wage growth is important for worker and supports consumer spending, a vital ingredient to the economy's good health. But a rapid pickup _ if not blunted by other economic forces _ can fan fears about inflation. The slower growth in wages could ease Federal Reserve fears that inflation might not recede as they have predicted.
Against that backdrop, the Federal Reserve is expected to leave a key interest rate at 5.25 percent when it meets next Wednesday. The rate hasn't budged since last August. Before that the Fed had boosted rates for two years to ward off inflation.
The report comes as President Bush has coped with lukewarm ratings from the public for his economic stewardship, according to Ap-Ipsos polls. Hoping to tap into that angst, Democrats have championed a boost in the minimum wage and have stiffened their stance against Bush's free-trade policies, which critics contend has contributed over the years to the loss of U.S. factory jobs.
The labor market weakness in April reflected job losses in construction, manufacturing, retailing and financial services. Health care and education, leisure and hospitality, government and various professional and business services were among the sectors adding positions.
The length of workers' job hunt was a bit shorter.
The average time the 6.8 million unemployed people spent in their job searches was 17.1 weeks in April, compared with 17.3 in March.
The economy in the January-to-March quarter grew at a feeble pace of 1.3 percent, the weakest in four years. It's the most up-to-date figure on gross domestic product, the best barometer of the country's economic fitness.
Economists predict the economy did better in the current April-to-June period _ in the 2 percent range _ which would still be considered sluggish. Growth is expected to pick up in the second half of the year. Still, the unemployment rate is expected to climb and reach close to 5 percent by year end.
Federal Reserve Chairman Ben Bernanke believes the economy will avoid falling into a recession this year, although his predecessor, Alan Greenspan, has put the odds at one in three.