The Washington Post
WASHINGTON — The U.S. unemployment rate jumped last month to its highest level in nearly eight years — 6 percent — as employers concentrated on producing more goods and services without hiring many additional workers, the Labor Department reported Friday.
Despite a strong rebound in economic growth following last year’s recession, the rate rose from 5.7 percent in March and surpassed the recession high of 5.8 percent in December. Many analysts expect joblessness to continue to increase for some time before continued economic growth encourages more firms to begin hiring.
The number of people with jobs did rise by 82,000 last month, according to the department’s monthly survey of American households. The unemployment rate nevertheless increased because that small job gain was swamped by a 565,000-person rise in the size of the nation’s workforce. As a result, the number of unemployed workers looking for work but unable to find it rose to 8.6 million.
"At the moment, employers are reluctant to hire permanent, full-time employees until the recovery is solid," said economist Sung Won Sohn of Wells Fargo. "Eventually, continuing economic growth will persuade businesses to hire permanent, full-time employees.
"The fact that the labor force has been rising, boosting the jobless rate, is not a bad sign," Sohn added. "As the economy expands, creating more jobs, people are coming out of the woodwork looking for jobs. This is the main reason why the jobless rate is a lagging economic indicator."
The department’s separate survey of businesses found that employers’ payrolls also climbed by 43,000 last month, as drops in construction and manufacturing payrolls were more than offset by increases in various service industries. However, Labor also revised downward its previous estimate for March payrolls to show a decline of 21,000 instead of a 58,000 gain.
Following the 1990-91 recession, which was worse than last year’s slump, the unemployment rate rose another percentage point from its level in March 1991, the official end of that downturn, before it began to fall. There is no specific date yet for the end of last year’s recession, but with the economy growing at a 5.8 percent annual rate in the first three months of this year, virtually all analysts say it has ended.
Bruce Steinberg, chief economist at Merrill Lynch &Co., echoed some of Sohn’s comments. Steinberg said he expects "that the labor market will show only very gradual improvement in 2002. That’s because corporate restructuring activities will continue full-force as companies resize themselves for profitability."
Steinberg and other analysts said the relatively weak labor market conditions portrayed by the report, along with other recent figures suggesting that economic growth is likely to slow down following the first quarter’s burst, assure that Federal Reserve officials won’t raise short-term interest rates for several months.
The officials meet next Tuesday in a policymaking session at which they are expected to make no change in the 1.75 percent target for overnight interest rates and to conclude that the risks are balanced between the central bank’s twin goals of price stability and sustainable economic growth. At this point, many analysts and investors believe that with inflation well under control, the officials also will leave rates unchanged when they meet late next month.
Adult women suffered most of the increase in joblessness last month as their unemployment rate rose to 5.4 percent from 5 percent. The rate for adult men was an identical 5.4 percent, but that was only two-tenths of a percent higher than in March. Joblessness among teens also rose 0.4 percentage points, to 16.8 percent.
The unemployment rate for whites increased to 5.3 percent from 5 percent, while that for blacks rose a half percentage point to 11.2 percent. The rate among persons of Hispanic origin rose to 7.9 percent from 7.3 percent.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
