Updated from 8:38 a.m. ET
reported that the April
showed the largest one-month decrease in payrolls since February 1991. Payrolls declined by 223,000 and the unemployment rate rose to 4.5%, the highest it's been since October 1998.
This is the second consecutive month that payrolls have declined, and with the exception of the automobile workers strike in the summer of 2000, it's the first time that has happened since early 1992. March payroll figures were revised to a loss of 53,000 from an original estimate of 86,000. Job losses were widespread, with the manufacturing sector losing 104,000 jobs and the service sector dropping 59,000 jobs. The consensus among economists was for 5,000 new nonfarm payrolls in April and for the unemployment rate to rise to 4.4%.
The labor market has been a
sore thumb in the economic landscape. Consumer spending has remained relatively strong and the
Fed has been lowering interest rates, so the investment community has been generally positive on the outlook for the economy looking out at the end of the year. But the trends in the labor market are currently unfavorable, and job security, for most people, remains the most important aspect of their assessment of their finances. With another month of job losses, that's sure to interrupt the market's general assumption that the economic environment was improving.
The losses were concentrated in the manufacturing and temporary help sectors, with significant losses coming from employees of electronic component and electrical industries. Help supply workers dropped again this month. This group of workers is generally used for temporary work at manufacturing firms.
Economists worry that increasing layoffs could produce a significant drop in confidence, dampening consumer spending further. The ongoing effects of the 10-year economic expansion are offsetting more recent warning signs, but the trends in the job market are moving in the wrong direction. The percentage of workers on the state benefit rolls has increased as finding a job has become a bit more difficult.
Average hourly earnings
increased 0.4% to $14.22, leaving the year-over-year rate steady at a 4.3% gain. Hourly earnings have been increasing steadily since the end of 1999, but some expect those gains to plateau in coming months because of the softness in the labor market.
was steady at 34.3 hours per week.