Payroll Cuts Push Jobless Rate to 6%

Times Staff Writer

U.S. companies cut their payrolls again in April, pushing the nation’s unemployment rate up to 6% and sending job losses for the last three months above the half-a-million mark, the Labor Department reported Friday.

The April rate tied December’s as the highest in almost nine years and, together with losses of a net 48,000 jobs last month and 525,000 since February, suggested that the economy lost virtually all its momentum during the Iraq war. It renewed fears that layoffs could begin to damage consumer spending, which has been the economy’s lifeline in recent years.

But for all that, the latest figures didn’t settle the economic question of the day: Are things getting better or worse?

“These numbers are still tainted by the Iraq war, which sort of froze everybody in their tracks,” said Jay N. Mueller, an economist and portfolio manager with Strong Capital Management in Milwaukee. “It will be another month or two before we start getting clean data.”


In the meantime, conditions looked none too pretty from the nation’s office parks and shop floors, where many of those who didn’t lose jobs in April lost work hours.

The average workweek for production and nonsupervisory workers, who account for more than three-quarters of the nation’s labor force, took its biggest dive in two decades during the month, dropping from 34.3 hours to 34 hours and pulling down average weekly earnings 0.7% to $513.74, according to Labor Department figures.

“A significant number of workers now face real wage losses, which means they’re going to consume less, which could slow the economy still more,” warned Jared Bernstein, an economist with the Economic Policy Institute, a generally liberal Washington think tank.

Republicans and Democrats pounced on the latest figures as proof of their positions -- a sign that the political parties already are jockeying for advantage in the 2004 presidential contest.

A day after declaring victory over Iraq in an appearance before the cheering crew of the aircraft carrier Abraham Lincoln, President Bush said the numbers demonstrated why Congress must pass most or all of his latest 11-year, $726-billion tax cut proposal.

“We need a bold economic recovery package so people can find work,” the president told an audience Friday at a United Defense Industries Inc. plant in Santa Clara, Calif.

Angered by Bush’s ship-deck showmanship on Iraq, Democrats responded with withering retorts.

“As thrilling as it was for our troops on the Lincoln to see President Bush ... millions of Americans back on dry land are wondering how they can land a job,” said Rep. Edward J. Markey (D-Mass.). “The Bush economy is falling apart.”


While Washington bickered, Wall Street breathed a sigh of relief over the April job losses, which it had expected would be closer to 100,000. Investors pushed stock prices up and bond prices down on the theory the numbers show the economy -- and corporate profits -- closer to a full-fledged recovery than previously thought.

The Dow Jones industrial average rose nearly 130 points, while the yield on the 10-year Treasury note climbed to 3.92% from 3.84% on Thursday.

A separate government report suggested that the nation’s deeply depressed manufacturing sector finally may be in for some relief. The Commerce Department said new orders for manufactured durable goods rose 2.2% in March and were up 4.2% from that month last year.

Still, April’s jobs numbers are the latest in a series of statistics to suggest that, although not slipping back into recession, the U.S. economy has yet to stage the kind of powerful, postwar comeback many analysts had been predicting.


In recent days, the most widely watched gauge of manufacturing, the Institute for Supply Management’s survey of purchasing managers, signaled that after improving somewhat, the nation’s goods-making sector is back in decline. In addition, the most recent weekly figures for initial jobless benefit claims show them stuck in the 450,000 range, signaling that employers continue to lay off workers even as war-related worries recede.

Analysts said such signs of weakness were surprising because Washington has treated the economy to one of the richest diets of interest rate reductions and tax cuts in modern times.

April’s net job loss of 48,000 comes atop an upwardly revised March loss of 124,000 and loss in February of 353,000, according to the Labor Department. It means that the economy has shed jobs in five of the last six months and posted year-over-year losses for 22 consecutive months, the longest stretch of job reduction since World War II.

The worst losses were among manufacturers, which sliced payrolls by 95,000 jobs in April, their 33rd straight month of employment cuts. The latest decline was partially offset by an increase in government employment of 32,000.


Some analysts saw a silver lining in the new figures, contending that the April jobless rate rose partly because the labor force grew -- a sign that people who had stopped looking for jobs have renewed their search.

“The unemployment kicked up to 6%, but it rose for all the right reasons,” said William Cheney, chief economist with John Hancock Financial Services Inc. in Boston.