msnbc.com
updated 5/8/2009 12:33:46 PM ET 2009-05-08T16:33:46

The pace of layoffs slowed in April when U.S. employers cut 539,000 jobs, the fewest in six months. But the unemployment rate climbed to 8.9 percent, the highest since late 1983, as many businesses remain wary of hiring given all the economic uncertainties.

The Labor Department tally released Friday wasn't nearly as deep as the 620,000 job cuts that economists were expecting, and was helped by a burst of federal government hiring of temporary workers to prepare for the 2010 Census. The rise in the unemployment rate from 8.5 percent in March matched economists' forecasts.

The new report underscored the toll the longest recession since World War II has taken on America's workers and companies. However, the slowdown in layoffs may bolster expectations that the worst of the downturn's hefty job losses are past.

"There are glimmers of hope. We are moving in the right direction in terms of layoffs. They are measurably less bad than what we've been through," said Mark Zandi, chief economist at Moody's Economy.com.

President Barack Obama acknowledged some of the green shoots Friday, while at the same time warning Americans to "expect further job losses in the months to come."

"Although we have a long way to go before we can put this recession behind us, the gears of our economic engine are slowly beginning to turn," Obama said in a speech in Washington on education for the unemployed.

"Step by step we're beginning to make progress," he said.

Still, companies will remain cautious in hiring, making it harder for laid-off workers to find new jobs.

If laid-off workers who have given up looking for new jobs or have settled for part-time work are included, the unemployment rate would have been 15.8 percent in April, the highest on records dating back to 1994. The total number of unemployed now stands at 13.7 million, up from 13.2 million in March.

Companies also kept a tight rein on workers hours. The average work week in April stayed at 33.2 hours, matching the record low set in March. Video: Obama outlines help for jobless

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

Major Market Indices

As the recession eats into sales and profits, companies have turned to layoffs and other cost-cutting measures to survive the storm. Those including holding down workers' hours, and freezing or cutting pay.

Job losses in February and March turned out to be deeper, according to revised figures. Employers cut 681,000 positions in February, 30,000 more than previously reported. They cut 699,000 jobs in March, more than the 663,000 first reported.

The deepest job cuts of the recession — 741,000 came in January. That was the most since the fall of 1949.

Employers last month cut the fewest jobs since 380,000 in October. Nonetheless, the April job losses were widespread.

Construction companies axed 110,000 jobs, down from 135,000 in March. Factories got rid of 149,000 jobs, down form 167,000 the month before. Retailers cut payrolls by nearly 47,000, less than the nearly 64,000 cut in March. And job losses in financial activities dropped by 40,000, down from 43,000 in the previous month.

The slower pace of job losses — along with 66,000 more federal jobs — helped to temper the overall payroll reductions in April. The pickup in federal employment was mainly due to the hiring of 63,000 temporary Census workers.

Looking ahead, economists expect monthly job losses continuing for most — if not all — of this year. However, they are hoping the reductions won't be as deep.

Labor Secretary Hilda Solis wouldn't speculate on the future pace of layoffs, but warned that some of the jobs lost "may not come back." She urged jobseekers to get the training and education needed to be contenders for work in growing industries, such as health care, which added nearly 17,000 jobs in April.

Fallout from housing, credit and financial crises — the worst since the 1930s — has hurt America's workers and companies, and the pain will continue. The jobs market traditionally doesn't rebound until well after an economic recovery starts.

Federal Reserve Chairman Ben Bernanke earlier this week gave his most optimistic prediction yet about the end of the recession, saying he expects the economy to start growing again this year — although the comeback could be weak and more jobs will disappear even after a recovery takes hold.

Companies will have little appetite to ramp up hiring until they feel the economy is truly out of the woods and a recovery is firmly rooted.

Against that backdrop, many economists predict the unemployment rate will hit 10 percent by the end of this year. Bernanke stopped short of that figure, saying it will be somewhere in the 9 percent range. Regardless, both private economists and Bernanke agree the unemployment rate will keep climbing into next year.

The Fed says unemployment will remain elevated into 2011. Economists say the job market may not get back to normal — meaning a 5 percent unemployment rate — until 2013.

And the job cuts have continued this week. Steelmaker Severstal International said it's idling plants in West Virginia and Ohio, resulting in 3,100 layoffs due to the continuing deterioration of the steel industry. Microsoft Corp. said it was starting thousands of the 5,000 job cuts it announced in earlier this year and left the door open to even more layoffs.

The Commerce Department on Friday said wholesale inventories dropped 1.6 percent in March, much larger than the 1 percent fall that analysts had expected. That followed a 1.7 percent drop in February, the largest monthly decline on records that go back 17 years.

It was the seventh straight month that wholesale inventories fell as businesses struggled to get stockpiles in line with plunging sales. Wholesalers saw sales drop 2.4 percent in March, the fifth decline in six months.

Still, glimmers of hope have emerged that the recession may be losing its grip on the country.

The Labor Department on Thursday said the number of newly laid-off workers filing applications for jobless benefits plunged to the lowest level in 14 weeks, a possible sign that the massive wave of layoffs has peaked. Still, the number of unemployed workers drawing benefits climbed to a new record — 6.35 million.

Other reports showed sales at many retailers fared better in April, with Wal-Mart Stores Inc. leading the way.

However, Friday's employment report showed that workers' wages barely budged in April, meaning consumers will probably stay somewhat cautious in the months ahead. Average hourly earnings nudged up to $18.51 in April, a 0.1 percent rise from the previous month.

In the U.S., the economy shrank at faster than a 6 percent annual rate late last year and early this year, the worst six-month performance since the late 1950s. Analysts think it is still shrinking now — but probably at about half that pace. Many predict the economy could start growing in the third or fourth quarter as tax cuts and government spending on big public works projects included in President Barack Obama's $787 billion stimulus package take hold.

Later Friday, Obama was to outline steps to help the unemployed pursue education and training, and keep their unemployment benefits, too. Currently, Americans who are out of work and want to go back to school have to give up their monthly unemployment check. And if they decide to return to school, they often don't qualify for federal grants because eligibility is based upon the previous year's income.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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