4 May 2001, 16:59 US Jobs Report-OVERVIEW
--US April payroll jobs -223,000; jobless rate +0.2 pt to 4.5%
--US April payroll jobs fall largest in 10 years
--US April jobless rate highest since October 1998
--US April private payroll jobs -261,000
--US April avg hourly earnings +0.4%; March +0.4%
--US April avg hourly earnings +4.3% from yr ago; March +4.3%
--US April available labor pool up to 10.8 mln; March 10.3 mln
--US April workweek unchanged; manufacturing workweek unchanged
--US March payroll jobs revised to -53,000 from -86,000
--US Feb payroll jobs revised to +136,000 from +140,000
--US April factory jobs -104,000; service producing -59,000
--US April construction jobs -64,000; govt up 38,000; retail +22,000
By Simon Kennedy and Andrew Williams
Washington, May 4 (BridgeNews) - The soft U.S. economy took its toll
on the labor market in April, as non-farm payroll jobs plunged 223,000 to
force the unemployment rate up to 4.5%, the highest since October 1998.
Job losses were widespread, as payrolls posted the biggest fall since the
U.S. economy was last in recession a decade ago. The deterioration in the
job market was much more severe than economists had expected, and opens
the way for more Federal Reserve interest rate cuts.
* * *
Analysts had projected a 25,000 increase in jobs and an unemployment
rate of 4.4%. In March, payrolls fell a revised 53,000 and the
unemployment rate was at 4.3%.
In April, the weak manufacturing sector again suffered the brunt of
job losses, as employment fell 104,000, the ninth consecutive monthly
decline and the largest since August. Construction firms cut 64,000
positions, having increased staff for three previous months, although a
Labor Department economist said wet weather might have reduced
construction during the month.
In a sign that the woes of the factory sector are affecting other
parts of the economy, wholesale traders cut payrolls by 2,000. Meanwhile,
service-producing industries, which had been resilient, shed 59,000 jobs,
the first decline since July. The narrow services category, which includes
restaurants and entertainment, slashed 121,000 jobs in April.
The weakness was partially offset by a 38,000 increase in government
employment, and 22,000 gain in retail jobs.
The labor market is key to the economy given consumer confidence and
spending patterns are largely determined by how secure people think their
jobs are. With the economy slowing sharply since last summer, the fear of
many is that increasing layoffs will gradually erode consumer sentiment,
forcing them to boost depleted savings and become less supportive of
activity.
Government data, released Thursday, showed jobless insurance claims
hitting a 5-year high and companies are slicing payrolls as they react to
slowing demand and narrowing profit margins.
Until now, falling stock prices and bleak economic news elsewhere have
unsettled consumers, but the fact many have jobs have allowed them to
remain confident, with consumer spending rising at a solid 3.1% annual
rate in the first quarter.
As consumer spending is responsible for two-thirds of economic output,
a retrenchment in the face of gloomy job prospects could pose a
significant threat to the economy after growth data last week indicated it
may be in better shape than many had surmised. Gross domestic product
rose at an annual
rate of 2.0% in January-March, double the rate of the previous month and
nearly twice forecasts.
The Federal Reserve has already reacted to the risk of a pronounced
downturn by cutting interest rates 200 basis points since Jan. 3. It is
expected to act again May 15 although Wall Street is currently debating
whether it will continue to move in 50-basis point steps or introduce a
more modest cut.
This report will harden the resolve of those projecting the steeper
cut, and may also fan debate that the central bank has even more work to
do this summer to shore up the economy.
WORKWEEK AND LABOR POOL
Amid the lackluster economy, employers held the workweek steady at
34.3 hours in April. Manufacturers also left their workweek hour unchanged
at 40.7 hours, and also kept overtime at 3.8 hours.
Further evidence that the labor market is loosening was that the labor
utilization pool, representing the sum of those employed and those who say
they want a job but are not actively seeking work, rose to a seasonally
adjusted 10.8 million from 10.3 million in March.
EARNINGS:
--In a sign of mounting wage pressures average hourly earnings rose a
seasonally adjusted 0.4%, or 5 cents, in April to $14.22.
--Hourly earnings in April were up 4.3% from a year earlier, matching
March's revised gain.
WHAT WAS EXPECTED:
April non-farm payroll growth undershoot private forecasts in the
BridgeNews survey, which ranged from down 75,000 to up 130,000
Expectations for the unemployment rate were 4.3 to 4.5%, while
forecasts for average hourly earnings ranged from up 0.2% to up 0.4%.
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