WASHINGTON - Jobseekers had a harder time finding work last month as the economy cooled and wary employers added the fewest positions in two and a half years. The jobless rate edged up to 4.5 percent.
The fresh employment picture provided by the Labor Department on Friday showed that payrolls grew by just 88,000 as job losses spread beyond the struggling manufacturing and construction sectors and into retailing and financial services. Workers' paychecks also grew more slowly.
Given the housing slump, rising energy prices and sluggish overall economic activity, "businesses are a bit more cautious and reluctant to hire as aggressively as they had," said Mark Zandi, chief economist at Moody's Economy.com. "Businesses were voraciously hiring people a year ago and now they've got a bit of indigestion."
The new count of jobs added to the economy was the fewest since 65,000 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 employment situation is weakening a bit - but not collapsing - as the nation's economy makes its way through a soft patch. Economists do predict the unemployment rate will climb in the coming months and approach 5 percent by year end, still relatively low by historic standards.
Still, for jobseekers - facing an even more competitive environment - that means sharpening their skills, networking more and polishing their resumes. "What I would say to anyone in the job market is ensuring that their skills are as updated as possible. This is a continuous learning economy. We all have to upgrade our skills every single day. Learning never stops," said Commerce Secretary Carlos Gutierrez, who once ran cereal giant Kellogg's, in an interview with The Associated Press. "In our economy, there is a real premium for skills," he added.
Those with jobs, meanwhile, saw wage growth slow.
Average hourly earnings rose to $17.25 in April, a 3.7 percent increase over the past 12 months. That marked the slowest annual rise in a year. Nonetheless, analysts considered the wage increase solid, and because it probably outpaced inflation, "workers are still staying ahead," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group. Wage growth is important for workers and supports consumer spending, a vital ingredient to the economy's good health. The slower growth in wages alleviated some inflation fears. 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, giving borrowers a break. Before that the Fed had boosted rates for two years to ward off inflation. On Wall Street, stocks rose as the employment report eased investors' inflation concerns. The Dow Jones industrials gained 23.24 points to close at 13,264.62. Democrats latched onto the new employment figures to rap President Bush. "Job creation needs to be a higher priority for this administration if we're going to make sure that families can achieve their aspirations and America can maintain its global economic leadership," said Sen. Charles Schumer, D-N.Y. Labor Secretary Elaine Chao pointed out that jobs are growing despite rising energy prices and the housing slump. The employment market remains in fundamentally good shape, administration officials said. Health care and education, leisure and hospitality, government and various professional and business services were among the sectors adding jobs in April. Those gains, however, were tempered by job losses in construction, manufacturing, retailing and financial services. The figures "are likely to send up warning flags for anyone seeking evidence that weakness in the housing and automotive sectors are spreading to other areas of the economy," said John Challenger, chief of Challenger, Gray & Christmas, an employment research firm. Of the 88,000 new jobs created in April, the government accounted for 25,000 of them, while the remaining 63,000 came from private companies. The economy added 26,000 fewer jobs in February and March combined than the government estimated a month ago. Economists pointed to that as additional signs of some weakness. The nudge-up in the unemployment rate in April affected people differently. The jobless rate for Hispanics rose to 5.4 percent, a three-month high. The unemployment rate for blacks, however, dipped to 8.2 percent. The jobless rate for women and men each held steady at 3.8 percent and 4 percent respectively. By one measure in the report, the job hunt grew longer. The median time the 6.8 million unemployed people spent in their job searches was 8.7 weeks in April, up from 8.5 weeks in March. The median is the middle point. The economy in the January-to-March quarter grew at a feeble 1.3 percent pace, the weakest in four years. That'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. If the soft patch persists and the job market keeps weakening, the Fed might move to lower rates later this year, some analysts said. 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. --- On the Net: Employment report: http://www.bls.gov/ AP-CS-05-04-07 1707EDTcomments powered by Disqus