'Glimmers of hope' as pace of U.S. layoffs slows

May 08, 2009 (The Philadelphia Inquirer - McClatchy-Tribune Information Services via COMTEX) -- SOV | Quote | Chart | News | PowerRating -- The nation's employers cut 539,000 jobs in April, the fewest in six months, amid slim signs of hope that the economy is improving.

Economists expected deeper cuts, as much as 620,000, as companies, such as Wyomissing-based Sovereign Bancorp. Inc., continued to announce layoffs. Since the start of the recession in December, 2007, 5.7 million jobs have been lost.

The unemployment rate rose to 8.9 percent, up from 8.5 percent. There are now 13.7 million people who are unemployed, up from 13.2 million in March. If laid off workers who have given up looking or who are settling for part time are included, the unemployment rate is now 15.8 percent.

"This is a truly awful report that will likely be taken as a good report because the job losses have slowed," said Joel Naroff, chief economist for TD Bank.

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.

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

"It's really rough," said Corey Lowe, 40, of Manayunk, one of 4,000 job-seekers who packed into a Greater Philadelphia Chamber of Commerce job fair at the Philadelphia Marriott last month.

"I've sent millions of resumes out," said Lowe, who lost his job in the financial-services sector in August 2007 and is now relying on occasional consulting jobs to make ends meet.

Nationally, there are 40,000 fewer jobs in the financial services sector than there were in March and 375,000 fewer than April 2008. In Lowe's particular field -- selling securities -- there are 67,000 fewer jobs than a year ago.

Even companies that aren't cutting jobs are keeping a lid on their hours, with the number of weekly hours unchanged at 33.2, down from 33.4 hours in the fourth quarter of 2008.

Jim Doherty, president of Weber Display and Packaging Inc., chose to avoid layoffs by cutting workers' hours at his box-making plant in Philadelphia's Port Richmond section.

"We thought that would be best for our customers and our employees," said Doherty.

In February, Doherty said, his workers were clocking just six hours a day. Now it's up to just under eight, almost a full day.

Across the nation, manufacturing hours rose from 39.4 a week in March to 39.6 a week in April, and overtime is up slightly.

Manufacturing continued to lose jobs nationally, dropping by 149,000. Together with 110,000 jobs axed in construction, the goods-producing sector lost 270,000 jobs. The service sector was a close rival, dropping 269,000, with 122,000 cuts in most of them in professional and business services, such as law.

Education and health services continued to grow, adding 15,000 jobs. Government payrolls grew by 72,000 as the government began hiring census takers.

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 -- were made 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.

The slower pace of job losses -- along with 72,000 more government jobs -- helped to temper the overall payroll reductions in April.

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.

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 that 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 Wheeling, W.Va., and Warren, 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 earlier this year, and left the door open to even more layoffs.

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

The Labor Department said Thursday that 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 that sales at many retailers fared better in April, with Wal-Mart Stores Inc. leading the way.

In the United States, 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 that 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 Obama's $787 billion stimulus package take hold.

This article contains information from the Associated Press.

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