A Slightly Better April Jobs Report Is Expected
Employers are letting up a bit on the mass layoffs they resorted to earlier this year to cope with the recession, but the unemployment rate is climbing because many businesses remain wary of hiring given all the economic and financial uncertainties.
The Labor Department on Friday is slated to release a report expected to show that a net total of 620,000 jobs were lost in April.
If analysts are correct, the figure — while still big — would be an improvement from March's 663,000 job losses and mark the fewest reductions since November.
The deepest job cuts of the recession, which started in December 2007 and is now the longest since World War II, came in January: 741,000 jobs vanished then, the most since the fall of 1949.
"I think the worst has passed in terms of losses," said John Silvia, economist at Wachovia. "But the jobs situation will remain tough." With few places for the out-of-work to land, the unemployment rate is expected to jump to 8.9 percent, from 8.5 percent in March.
If that happens, it would mark the highest jobless rate since the fall of 1983, when the country was recovering from a severe recession that drove unemployment past 10 percent.
As the recession eats into sales and profits, companies have turned to layoffs and other cost-cutting measures to survive the storm. Those including holding down workers' hours, and freezing or cutting pay.
Looking ahead, economists expect monthly job losses continuing for most — if not all — of this year. However, they are hoping the reductions won't be as deep.
Federal Reserve Chairman Ben Bernanke earlier this week gave his most optimistic prediction yet about the end of the recession, saying he expects the economy to start growing again this year — although the comeback could be weak and more jobs will disappear even after a recovery takes hold.
Companies will have little appetite to ramp up hiring until they feel the economy is truly out of the woods and a recovery is firmly rooted. Against that backdrop, many economists predict the unemployment rate will hit 10 percent by the end of this year. Bernanke stopped short of that figure, saying it will be somewhere in the 9 percent range.
Regardless, both private economists and Bernanke agree the unemployment rate will keep climbing into next year. The Fed says unemployment will remain elevated into 2011.
Economists say the job market may not get back to normal — meaning a 5 percent unemployment rate — until 2013. More than 5 million jobs have vanished in the recession, and Bernanke predicted "further sizable job losses" in the coming months.
Fallout from housing, credit and financial crises — the worst since the 1930s — has hurt America's workers and companies, and the pain will continue. The jobs market traditionally doesn't rebound until well after an economic recovery starts.
More companies recently announced job cuts. General Motors laid out a restructuring plan that includes cutting 21,000 U.S. factory jobs by next year. Microsoft said it was starting thousands of the 5,000 job cuts it announced in earlier this year and left the door open to even more layoffs.
However, glimmers of hope have emerged that the recession may be losing its grip on the country.
The Labor Department on Thursday said the number of newly laid-off workers filing applications for jobless benefits plunged to the lowest level in 14 weeks, a possible sign that the massive wave of layoffs has peaked.
Still, the number of unemployed workers drawing benefits climbed to a new record — 6.35 million.
Other reports showed sales at many retailers fared better in April, with Wal-Mart Stores leading the way.
In the U.S., the economy shrank at faster than a 6 percent annual rate late last year and early this year, the worst six-month performance since the late 1950s. Analysts think it is still shrinking now — but probably at about half that pace.
Many predict the economy could start growing in the third or fourth quarter as tax cuts and government spending on big public works projects included in President Barack Obama's $787 billion stimulus package make their way through the economy.
Information for the monthly employment report is collected around the middle of the month. A copy of the report is given to the White House's Council of Economic Advisers on Thursday afternoon. Bernanke gets employment information Thursday night.