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The U.S. economy lost 20,000 jobs in April, its fourth straight monthly decline. Once again, there were big losses in construction, retail and manufacturing. But overall the losses were smaller than expected and the overall unemployment rate actually edged down slightly to 5 percent. This is the second major report this week to suggest the downturn may not be as severe as predicted.
NPR's Jim Zarroli reports.
JIM ZARROLI: On the face of it, the picture of employment market in today's report was bleak. The Labor Department said not only did the economy shed jobs in April, but it also lost somewhat more jobs than first believed in February and March. Since the beginning of the year, some 321,000 jobs have disappeared from business payrolls. Mark Vitner is senior economist at Wachovia.
Mr. MARK VITNER (Senior Economist, Wachovia): I don't want anybody to come away with the illusion that the economy is strong, because we're far from strong. And we're looking for miniscule gains in real GDP in 2008.
ZARROLI: Once again the housing sector took the biggest hit. Sixty-one thousand construction jobs disappeared in April. Alan Sprinkle is senior vice president of Iowa-based Regency Homes. With a mortgage downturn, the company is building fewer than half as many homes as it built three years ago. And Sprinkle says last week the company laid off 103 people, nearly its entire staff.
Mr. ALAN SPRINKLE (Senior Vice President of Operations, Regency Homes): At this point it actually just leaves the owners of the company in the company, and the rest of us right now are trying to assist in putting some stuff together. Actually, we're functioning in the company as volunteers for a two-week period until we can try to put - so we can try to put it back together.
ZARROLI: But today's jobs report showed surprising gains in some other sectors, including business services, government and education and health care. And as bad as the report may have been, it was better than a lot of economists had predicted. It was the second time this week that a major economic report surpassed expectations. On Wednesday the government said the nation's gross domestic product rose six-tenths of a percentage point in the first three months of the year, which was weak but still in positive territory. U.S. Commerce Secretary Carlos Gutierrez says today's jobs report was disappointing but it could have been a lot worse.
Mr. CARLOS GUTIERREZ (U.S. Commerce Secretary): With everything we've been through, this tremendous housing correction and the decline of the housing market, the positive side is that we've been able to withstand that and, you know, we're still standing.
ZARROLI: The report raises new questions about whether the U.S. economy is in actual recession or just a patch of slower growth. Most economists have been in the recession camp lately, but Wachovia's Mark Vitner says it's no longer so clear.
Mr. VITNER: There's no question that the economy is in decline, but the decline is not yet sharp enough to qualify as a recession, and it's possible that we will avoid a downturn.
ZARROLI: Wage and benefit costs haven't risen all that much lately, and so even though the economy's slowing, Vitner says, there's still less pressure on companies to fire people than in the past, and that could blunt the impact of the downturn. But economist Douglas Elmendorf of the Brookings Institution says the picture isn't that clear.
Mr. DOUGLAS ELMENDORF (Economist, Brookings Institution): We've had a number of pieces of data that imply the economy is slowing, but not going off a cliff.
ZARROLI: That is good news, Elmendorf says, because it means that a recession won't be as severe as expected, but he adds...
Mr. ELMENDORF: It doesn't say anything about how long the recession might last. That depends more on the ability of banks to start lending more again and the confidence of businesses and consumers to spend more.
ZARROLI: And, Elmendorf says, the turmoil in the credit markets and the drop in house prices has taken a clear toll on the psyches of consumers. It's also made lenders more fearful about parting with money. If that doesn't change soon, today's better-than-expected jobs report will turn out to have been a fluke.
Jim Zarroli, NPR News, New York.
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