Originally created 05/04/02

Jobless rate jumps to 6 percent



WASHINGTON -- The nation's unemployment rate shot up to 6 percent in April - the highest point in nearly eight years - as the lingering effects of last year's recession continued to batter workers.

The rise in the jobless rate occurred even though U.S. companies added jobs for the first time in nine months, the Labor Department reported Friday.

Payrolls grew by 43,000 during the month, a welcome sign after companies had slashed hundreds of thousands of positions to cope with last year's recession and the jolt of the Sept. 11 terror attacks.

Still, job growth wasn't strong enough in April to take care of the 565,000 people who entered the work force during the month. That caused the unemployment rate to rise from March's 5.7 percent rate.

The growth in payrolls comes after the government said that companies actually cut 21,000 jobs in March, a big revision from the 58,000 job gain previously reported.

April's jobless rate was the highest since August 1994, when unemployment also was at 6 percent.

Job growth in services, normally an engine of job creation in the United States, rose by 87,000, recouping job losses that totaled 245,000 in October and November.

After more than a year of sustained job cuts, temporary help firms added 66,000 positions in April, the third straight month of job gains.

Economists say that's a particularly encouraging sign for job growth in general in the months ahead. Companies often hire temporary workers before they hire new full-time workers or rehire laid-off workers, they say.

Employment in the insurance industry rose by 9,000, after suffering six months of job losses.

Those and other job gains were tempered by losses elsewhere.

The construction industry shed 79,000 jobs. Factories - hardest hit by the recession - cut employment by 19,000 in April. But job losses in the battered industry show signs of moderating. The industry's job losses averaged 37,000 a month from February to April, compared with average monthly losses of 119,000 from March 2001 to January.

Employment held steady in electronic equipment manufacturing, and rose slightly in industrial machinery, following more than a year of heavy job losses in both industries. But employment continued to drop at motor vehicle plants and aircraft factories.

Even as the economy recovers, the nation's unemployment rate is expected to rise in coming months.

Some economists predict the jobless rate will peak at from just over 6 percent to around 6.5 percent by June, reflecting their belief that companies will be reluctant to quickly hire back laid-off workers until profits recover and executives are convinced the recovery is here to stay.

The economy sprinted out of recession with a 5.8 percent growth rate in the first quarter of this year. But analysts estimate the recovery has slowed in the current quarter and they project economic growth at 3 percent to 3.5 percent rate.

Given the budding recovery, many economists expect the Federal Reserve to leave short-term interest rates - now at 40-year lows - unchanged when it meets May 7. The Fed cut rates 11 times last year to rescue the economy from recession, which began in March 2001.