Jobless rate may be at 25-year high
Unemployment in the United States probably climbed in April to a 25-year high, showing the labor market will be one of the last areas to emerge from the worst recession in at least 50 years, economists said.
The jobless rate jumped to 8.9 percent last month from 8.5 percent in March and employers cut at least 600,000 workers from payrolls for a fifth straight time, according to the median estimate in a Bloomberg News survey ahead of a Labor Department report that is due Friday. Other figures may show service industries shrank at a slower pace.
Companies may keep trimming staff and spending in a bid to shore up profits until sales show sustained gains, something economists say is unlikely to happen for months. Even when an economic rebound begins to take hold, the loss of jobs and smaller paychecks could lead to a muted expansion.
"The recession will be officially over this year, but the recovery will be sluggish," said Michael Gregory, a senior economist at BMO Capital Markets in Toronto.
An estimated 600,000 workers were cut from payrolls last month, according to the survey median, bringing total job losses since the recession began in December 2007 to 5.7 million, the most of any economic slump in the post-World War II era.
It's "hard to fathom any sustained strength in consumer spending" until the job losses ease, said Gregory, who estimated the unemployment rate may rise to 9.5 percent by year-end and level off around 9.7 percent in 2010.