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Layoffs Slow But Jobless Rate Still Higher In April

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Layoffs Slow But Jobless Rate Still Higher In April


Layoffs Slow But Jobless Rate Still Higher In April

Layoffs Slow But Jobless Rate Still Higher In April

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The Labor Department reported Friday that the pace of layoffs slowed in April. Employers cut 539,000 jobs — the fewest in six months. However, the unemployment rate climbed to 8.9 percent.


NPR's business news starts with unemployment at nearly 9 percent.

(Soundbite of music)

MONTAGNE: The American economy lost nearly 540,000 jobs in April. The Labor Department's latest unemployment numbers came out this morning, and while it sounds dreadful, it's actually an improvement over recent months. Frank Langfitt covers labor for NPR. He's in our Washington studio and joins us now. And Frank, how does today's number mean that the labor market is beginning to turn around?

FRANK LANGFITT: Well, this is the hope, Renee. And it looks like losses have really moderated. But it also says a lot about how bad our economy is, that we could lose over 500,000 jobs, and that could be seen as a good thing. The reality, though, is this is the first time we've seen job losses below 600,000 in about five months, so that's definitely an improvement. A few caveats, though. The unemployment rate just jumped up to about 8.9 percent. And private-sector job losses were still really big last month. One reason they don't look quite as bad is that government hiring was up about 72,000. A lot of that was census jobs. Last thing I just would mention to people as they're trying to follow this, there have been false bottoms before. May last year, it looked like losses were ebbing, and then it plunged again the next month.

MONTAGNE: Other than those census jobs or government jobs you just mentioned, why are the job losses slowing down now?

LANGFITT: Well, you know, a lot of employers have cut really deeply, about as deep as they can and continue to produce for the demand out there. There just isn't that much labor slack for a lot of businesses. The other thing, of course, as we've talked about before, this is a consumer-driven economy. Seventy percent of our gross domestic product comes out of that consumer spending. And there's signs that consumers are spending a bit more now. Wal-Mart last month, their sales were up about 5 percent. People cut back, really, a lot in their spending at the end of last year, and now there seems to be a little more confidence.

Now, some of this is clearly psychological. There's a guy I talked to, Nigel Gault - he's an economist at IHS Global Insight, an analysis firm - and he says this sort of positive attitude can help.

Mr. NIGEL GAULT (Economist, IHS Global Insight): I think psychology certainly does have an influence because it influences how far the economy falls. It doesn't cure the underlying problem. So that's going to take a long time.

MONTAGNE: Well, let's talk about that. The nation has already lost 5.7 million jobs since the recession began at the end of 2007, still losing jobs. How long will it take until we start actually adding jobs?

LANGFITT: Well, it's going to take a while. I mean, even if this is the beginning of a turning point, most analysts say maybe jobs could pick up at the end of the year, around Christmastime. Others say well into 2010. Larry Michel runs the Economic Policy Institute. It's a think tank that focuses on working people. And he says even as people see signs of hope, they need to be realistic about all this.

Mr. LARRY MICHEL (Economic Policy Institute): It's normal for people to be looking for the turnaround, for something that indicates a change in trend. What's, I think, important to keep your eye is that the trend is that we've lost a tremendous amount of jobs. We have a deep job hole. The hole is getting bigger and bigger.

MONTAGNE: And that is possibly to be expected, following the last recession, which began in 2001. There was what's called a jobless recovery, and that meant the economy improved, but it took a long time for hiring to pick up. Why does that happen?

LANGFITT: Well, businesses take time to add staff. They're nervous and unsure, just like everybody else. And so what they might first do is add hours to the workers they already have before doing a lot more hiring. Or they might hire temp workers, just to be careful. So the economy could grow slowly, but for a lot of people, it could still feel like we're in a recession. You may also see something like this coming as we get into a recovery now, though not as extreme in the past because we've already had such big layoffs.

MONTAGNE: And Frank, finally, looking past his report, are there more big job losses that you would know are coming?

LANGFITT: Well, we do. I mean, as you know, I also cover the auto industry for NPR, and that's where we're going to see a lot. I was out at union halls in Detroit last week, and workers are just bracing for more hits. Chrysler, as you know, it's in bankruptcy. They're going to be shutting down six plants by the end of next year. General Motors, they're trying to stay out of bankruptcy. But they just announced they lost $6 billion in the first three months of this year, and they're also going to try to cut about 21,000 factory jobs. So you're going to still see a big shakeout in the auto industry, and that's going to show up in these reports. And frankly, those are good-paying jobs. A lot of those people make about 28 bucks an hour.

MONTAGNE: NPR's Frank Langfitt. Thanks very much.

LANGFITT: Happy to do it, Renee.

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U.S. Jobless Rate Climbs to 8.9 Percent

NPR's Frank Langfitt Reports On The Jobs Data

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The nation's unemployment rate surged to 8.9 percent in April, its highest level in more than 25 years, but the 539,000 jobs shed represented the fewest losses in six months, the Labor Department said Friday.

President Obama called the latest numbers "somewhat encouraging" but added that the losses were "still a sobering toll."

"It underscores the point that we're still in the midst of a recession that was years in the making and will be months or even years in the unmaking," the president said, adding that Americans "should expect further job losses in the months to come."

The 539,000 jobs shed represented the fewest losses in six months, the Labor Department said, and the news was met by Wall Street investors with cautious optimism, sending the markets up sharply.

The figure was up from March's 8.5 percent rate, but the easing of job losses surprised most economists and broke a five-month streak of payrolls shedding 600,000 or more jobs, a possible sign that the recession is bottoming out.

Companies, however, remain cautious, and many laid-off Americans are finding it tough to find new work. On Thursday, the Labor Department reported a record number of people receiving state unemployment benefits.

DuPont Co. and Microsoft Corp. were among the companies this week that said more staff cuts might be needed.

Economist Hugh Johnson of Johnson Illington Advisors cautioned that one month's numbers are not enough to go on, but he said that the snapshot looks encouraging.

The data are "clearly better than I thought," he told NPR. "Things are not quite as bad as they were in the previous six months."

"I would be cautiously optimistic. The jobless numbers seem to be leveling off," he said.

In Obama's remarks on Friday, he announced a plan to ease restrictions on government grants for education to help retrain unemployed Americans, saying the unemployment system needed to be "not just a safety net but a steppingstone to a new future."

He called for an easing of restrictions on federal Pell grants for education to help furloughed workers retrain.

"The idea here is to fundamentally change our approach to unemployment in this country, so that it's no longer just a time to look for a new job, but to prepare yourself for a better job," he said.

Meanwhile, the Commerce Department reported on Friday that wholesalers slashed inventories for a seventh straight month in March, cutting them 1.6 percent. That followed a 1.7 percent drop in February, the largest monthly decline on records that go back 17 years. Wholesalers saw sales plunge 2.4 percent in March, the fifth decline in six months.

Since the recession began in December 2007, the economy has lost a net total of 5.7 million jobs.

March's payroll figure was revised to show a decline of 699,000, instead of the initially reported drop of 663,000. Job losses in February were also revised to 681,000 from 651,000. Government jobs were up by 72,000 after falling by 6,000 in March.

The service sector lost 269,000 positions; manufacturing shed 149,000 and construction cut 110,000 for in April.

From NPR staff and wire reports