Job seekers join a line of hundreds at a job fair in New York. Photo / AP
Job seekers join a line of hundreds at a job fair in New York. Photo / AP
United States unemployment probably climbed in April to a 25-year high, showing the job market will be one of the last areas to emerge from the worst recession in at least 50 years, economists are saying ahead of reports this week.
The jobless rate jumped to 8.9 per cent lastmonth from 8.5 per cent 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 May 8 Labour Department report. 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 for months. Even when an economic rebound begins, the loss of jobs and smaller pay cheques are likely to lead to a muted expansion.
"The recession will be officially over this year, but the recovery will be sluggish," says Michael Gregory, a senior economist at BMO Capital Markets in Toronto. "Getting out of the jobs recession will take longer."
The 600,000 believed to have been fired last month bring total job losses since the recession began in December 2007 to 5.7 million, the most since World War II.
Gregory estimates that the unemployment rate may rise to 9.5 per cent by the end of the year and level off around 9.7 per cent in 2010.
Gross domestic product dropped at a 6.1 per cent annual pace in the first three months of this year after contracting at 6.3 per cent in the last quarter of 2008, Government figures showed last week. Consumer spending climbed, ending its biggest slide since 1980.
Still, economists surveyed by Bloomberg in early April believe spending, the biggest part of the economy, will falter again this quarter before showing more sustained gains in the second half of the year.
