U.S. Loses 20,000 Jobs in April


The U.S. lost fewer jobs than forecast in April, and the unemployment rate unexpectedly dropped, signaling that the economic slowdown didn't gather pace at the start of the second quarter.

Payrolls shrank by 20,000 workers, following a revised 81,000 drop in March that was larger than previously estimated, the Labor Department said today in Washington. Economists surveyed by Bloomberg News projected a loss of 75,000 jobs. The jobless rate fell to 5 percent, from 5.1 percent in March.

An average of 121,000 jobs a month were eliminated in the first four months of the 2001 recession, indicating that the current slowdown may be milder by comparison. Seven Federal Reserve interest-rate cuts and the arrival of government tax rebate checks may be enough to help consumers weather the slump in home values and jump in fuel costs.

Today's report also showed that income growth slowed last month as the economy stalled. The economy's 0.6 percent expansion rate over the six months through March was the weakest performance since the U.S. was last in a recession in 2001.

Economists forecast payrolls would fall by 75,000 in April after a previously reported 80,000 decline the previous month, according to the median of 82 projections in a Bloomberg News survey. Estimates ranged from declines of 150,000 to 18,000.

After the report, U.S. stock-index futures extended gains as the figures boosted optimism that the labor market will weather an economic slowdown.

Revisions subtracted 8,000 jobs from the previously reported figures for February and March. The last time the economy lost jobs for at least four months coincided with the start of the Iraq War in 2003.

Factory payrolls slumped by 46,000 workers, Labor said. Economists surveyed by Bloomberg had forecast a decline of 35,000. In the construction industry, employers cut 61,000 jobs, the most since February 2007.

General Motors Corp., the world's largest automaker, said April 28 it's reducing production of large pickup trucks and sport-utility vehicles this year at four plants in the U.S. and Canada because of slowing sales. The plan affects 3,550 workers.

Industry figures released yesterday showed that autos sold at a lower-than-forecast 14.4 million annual pace in April, the fewest since 1998.

Service industries, which include banks, insurance companies, restaurants and retailers, added 90,000 workers last month, the most this year, after an increase of 7,000 in March, today's report showed. The advance was led by business and professional services, along with education and health jobs.

Retail payrolls declined by 26,800 after falling 19,300 a month earlier.

The U.S. economy expanded at a 0.6 percent annual pace in the first quarter, the Commerce Department said on April 30, as inventories increased because consumer spending slowed and business investment dropped. The rise in stockpiles, along with smallest gain in household spending in seven years, indicates the economy will weaken further in coming months.

 


TradingEconomics.com, Bloomberg
5/2/2008 6:29:16 AM