US unemployment hits 8.9%, job losses moderate
Posted: 08 May 2009 2303 hrs
WASHINGTON: US labour market losses eased in April with 539,000 jobs axed, while the unemployment rate hit 8.9 percent, according to data on Friday suggesting the economy remains weak but may be stabilising.
The jobless rate hit its highest level since September 1983 but the pace of job losses slowed appreciably, offering another possible sign of an easing of the severe economic slump.
The number of job losses was not nearly as bad as the consensus Wall Street estimate of 600,000 in the Labour Department monthly payrolls report, one of the best indicators of economic momentum.
"Obviously the economy is still contracting, but the rate of decline is easing," said Jay Bryson, economist at Wachovia Securities.
"I would say that momentum is shifting. We're not in a freefall, and there are reasons to be optimistic going forward."
The department revised its estimates to show steeper job losses in February and March - February cuts were 681,000 instead of 651,000 and March losses revised up to 699,000 from 663,000.
In April, the private sector lost 611,000 jobs but the overall picture was helped by a gain of 72,000 government posts.
Some analysts said the report showed only marginal improvement.
"It may have been better than expected but it still wasn't as good as it looks," said Avery Shenfeld at CIBC World Markets.
"When you add in the downward revisions to prior months and strip out an outsized gain in government employment, the overall trend still looks ugly."
The goods-producing sector shed 270,000 jobs including 149,000 in manufacturing and 110,000 in construction. Employment in the services sectors fell by 269,000, the report showed.
Shenfeld said that for the economy to improve, "we would need to see much more improvement in cyclically sensitive sectors like manufacturing and retailing."
Although the pace of job losses moderated, the report shows an economy struggling to regain traction.
The agency said that since the recession began in December 2007, some 5.7 million jobs have been lost. The number of unemployed persons rose to 13.7 million in April, up by six million over the past 12 months.
The number of long-term unemployed - without jobs for 27 weeks or more - increased by 498,000 to 3.7 million over the month and has risen by 2.4 million since the start of the recession, the report showed.
On the positive side, the labour force participation rate rose to 65.8 percent as 683,000 joined the workforce, a sign that more people are looking for employment instead of dropping their job search.
One key figure, average hourly earnings, managed a small gain of one cent to 18.51 dollars, a rise described as tepid by analysts.
"Hourly earnings growth did not add much to consumer buying power," said Patrick O'Hare at Briefing.com.
"There have been hopes recently of a steadying in consumer spending leading to a stabilisation in economic trends this fall or later this year, but the data does not provide much support for that argument."
The US economy suffered a massive 6.1 percent output decline in the first quarter of 2009 after a 6.3 percent pace of decline in the fourth quarter of 2008.
But consumer spending, a key driver of activity, rebounded in early 2009 and the drop in output was linked mainly to a plunge in capital spending and a big draw-down in business stockpiles, which some say will force industry to ramp up production soon.
Aaron Smith at Moody's Economy.com said the labour market needs to show more improvement to nurture a recovery.
"If the economy continues to lose 500,000 to 600,000 jobs per month, stabilisation in consumer spending and housing will quickly give way to renewed weakening.
Posted: 08 May 2009 2303 hrs
WASHINGTON: US labour market losses eased in April with 539,000 jobs axed, while the unemployment rate hit 8.9 percent, according to data on Friday suggesting the economy remains weak but may be stabilising.
The jobless rate hit its highest level since September 1983 but the pace of job losses slowed appreciably, offering another possible sign of an easing of the severe economic slump.
The number of job losses was not nearly as bad as the consensus Wall Street estimate of 600,000 in the Labour Department monthly payrolls report, one of the best indicators of economic momentum.
"Obviously the economy is still contracting, but the rate of decline is easing," said Jay Bryson, economist at Wachovia Securities.
"I would say that momentum is shifting. We're not in a freefall, and there are reasons to be optimistic going forward."
The department revised its estimates to show steeper job losses in February and March - February cuts were 681,000 instead of 651,000 and March losses revised up to 699,000 from 663,000.
In April, the private sector lost 611,000 jobs but the overall picture was helped by a gain of 72,000 government posts.
Some analysts said the report showed only marginal improvement.
"It may have been better than expected but it still wasn't as good as it looks," said Avery Shenfeld at CIBC World Markets.
"When you add in the downward revisions to prior months and strip out an outsized gain in government employment, the overall trend still looks ugly."
The goods-producing sector shed 270,000 jobs including 149,000 in manufacturing and 110,000 in construction. Employment in the services sectors fell by 269,000, the report showed.
Shenfeld said that for the economy to improve, "we would need to see much more improvement in cyclically sensitive sectors like manufacturing and retailing."
Although the pace of job losses moderated, the report shows an economy struggling to regain traction.
The agency said that since the recession began in December 2007, some 5.7 million jobs have been lost. The number of unemployed persons rose to 13.7 million in April, up by six million over the past 12 months.
The number of long-term unemployed - without jobs for 27 weeks or more - increased by 498,000 to 3.7 million over the month and has risen by 2.4 million since the start of the recession, the report showed.
On the positive side, the labour force participation rate rose to 65.8 percent as 683,000 joined the workforce, a sign that more people are looking for employment instead of dropping their job search.
One key figure, average hourly earnings, managed a small gain of one cent to 18.51 dollars, a rise described as tepid by analysts.
"Hourly earnings growth did not add much to consumer buying power," said Patrick O'Hare at Briefing.com.
"There have been hopes recently of a steadying in consumer spending leading to a stabilisation in economic trends this fall or later this year, but the data does not provide much support for that argument."
The US economy suffered a massive 6.1 percent output decline in the first quarter of 2009 after a 6.3 percent pace of decline in the fourth quarter of 2008.
But consumer spending, a key driver of activity, rebounded in early 2009 and the drop in output was linked mainly to a plunge in capital spending and a big draw-down in business stockpiles, which some say will force industry to ramp up production soon.
Aaron Smith at Moody's Economy.com said the labour market needs to show more improvement to nurture a recovery.
"If the economy continues to lose 500,000 to 600,000 jobs per month, stabilisation in consumer spending and housing will quickly give way to renewed weakening.
