Jobs: A little less bleak

Payrolls post smallest decline since in six months, even as unemployment rises to 25-year high.

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By Chris Isidore, senior writer

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NEW YORK ( -- The unemployment rate hit a 25-year high in April, but there were signs of hope as the monthly job loss total fell to the lowest level in six months.

The Labor Department reported Friday that employers cut 539,000 jobs from payrolls in the month. That's an improvement from the revised reading of 699,000 that were lost in March, and the best reading since October, when the economy shed 380,000 jobs.

Still, that brings job losses since the start of 2008 to 5.7 million. And even some economists who believe that economic growth and an end to the recession are close at hand project that job losses could continue through the end of the year or into 2010.

Economists had forecast a loss of 600,000 jobs in April, but there had been signs in recent days that the job losses might not be as bad as expected. A reading on private sector employment by payroll services firm ADP showed a big drop in job losses in April, and there has been a steady decline in recent weeks in people filing for first-time unemployment benefits.

"The massive hemorrhaging in the job market over the past four months has slowed and the worst is behind us," said Sung Won Sohn, economics professor at Cal State University, Channel Islands. "The improving trend in initial claims, a good leading indicator of the employment trend, points to further improvements in the future."

But other experts cautioned against expecting the economy to start adding jobs again in the near term.

Tig Gilliam, chief executive of Adecco Group North America, a unit of the world's largest employment staffing firm, said he wouldn't be surprised to see job losses of 500,000 or more again in the May report.

"The good news is the rate of job losses is slowing," he said. "But it's too soon to say the market has turned around. If we can get back to zero job losses by December, that would be good."

Gilliam pointed out that much of the better-than-expected payroll number is due to a 72,000 increase in government jobs, many of them workers hired to conduct the 2010 census.

The private sector lost 611,000 jobs in April, and Gilliam said "the private sector employment is more important. You've got the census and the stimulus money affecting public sector jobs in this report. The big unkown is when we'll see the stimulus money drive into private sector jobs."

The report showed 72% of private industry sectors reported job losses in the month, although that was an improvement from the nearly 80% that shed jobs in March.

Construction lost another 110,000 jobs while manufacturing shed 149,000 workers and retailers cut staff by 47,000. Business and professional services, a catch-all sector that includes accountants and lawyers that is seen as a sign of overall business hiring, shed 122,000 jobs.

The unemployment rate, based on a separate survey, rose to 8.9% from 8.5% in March, the worst reading since September 1983. Economists surveyed by had forecast the rate would rise to 8.9%.

But the unemployment rate, as bad as it was, doesn't indicate the extent of the pain being felt by job seekers. The report showed 27% of the 13.7 million unemployed Americans have been out of work for more than six months, the highest percentage of long-term unemployed among the overall pool of jobless in the 61 years that reading has been tracked.

Almost one out of six members of the labor force are either unemployed, working part-time when they would prefer to work full-time, or are out of work and have become so discouraged that they did not look for work and thus not counted in the unemployed total. That's the highest reading in that measure that goes back to 1994.

"While the pace of the hemorrhaging of jobs may be slowing, the crisis in the labor market continues to deepen at a stunning rate," said Heidi Shierholz, economist with the Economic Policy Instiute, a labor-supported Washington think tank.

Wachovia senior economist Mark Vitner and Gilliam both say they're worried about the impact on jobs in coming reports from the bankruptcy at Chrysler, which will result in a 30-to-60 day shutdown at all of its plants, and the possible bankruptcy at General Motors (GM, Fortune 500). The loss of jobs -- not just at those companies but at their dealers and suppliers -- will be substantial.

And Vitner said that while Wachovia is projecting that there will be economic growth by the fourth quarter of this year, it's projecting that unemployment will continue to rise into 2010, topping out at 10.8% in April of that year.

"We are moving in the right direction, but the recession is not over, and even when it's over that's not an end of the tough times," said Vitner. To top of page

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