WASHINGTON -- The pace of U.S. job losses tapered off a bit last month, suggesting that while the economy remains mired in a prolonged recession, it may be finally starting to find its footing.
Still, even though the decline was the smallest in six months, a good deal of the improvement came from temporary government hiring in advance of next year's Census.
And another half-million-plus drop in employment and further increase in the unemployment rate to a 25-year high remains a sober reminder that any road to recovery will be bumpy.
Separately, U.S. wholesale inventories fell for a seventh straight month in March as sales returned to negative territory after posting a small gain in February, a government report released Friday showed.
Nonfarm payrolls fell 539,000 in April, the U.S. Labor Department said Friday, slightly better than Wall Street expectations for a 610,000 decline, according to a Dow Jones Newswires survey. March was revised to show a steeper payroll drop of 699,000.
The data suggest that while labor markets are healing, "the improvement may be more gradual than hoped," said Zach Pandl, economist at Nomura.
The economy has shed 5.7 million jobs since the recession started in December 2007, with almost 2.7 million of those losses occurring in the last four months alone.
"Widespread job losses continued throughout the private sector," said Keith Hall, Commissioner of the Bureau of Labor Statistics. Private-sector employment fell by 611,000 last month, down a bit from the 700,000 average of the past four months, Hall said.
The unemployment rate, which is calculated using a survey of households as opposed to companies, increased 0.4 percentage point to 8.9%, the highest level since September 1983. Employment in the household survey rose 120,000 last month, the first increase in one year. That was offset by a 563,000 increase in unemployment.
Many economists expect unemployment to eventually top 10%. Not only does the economy have to stop losing jobs before the jobless rate stabilizes, it actually has to add payrolls at a modest rate just to keep up with new entrants into the labor force.
In testimony to the Congressional Joint Economic Committee Tuesday, Federal Reserve Chairman Ben Bernanke said, "currently we don't think it's going to get to 10%" though even something in the 9% range is still "way too high."
By broader measures, unemployment -- or at least underemployment -- is already well into double digits. When marginally attached and involuntary part-time workers are included, the rate of unemployed or underemployed workers hit 15.8% last month, up from 15.6% in March and 6.6 percentage points higher than it was one year ago.
Average hourly earnings advanced just $0.01 to $18.51. That was up just 3.2% from one year ago, a sign that inflation isn't a threat.
Should the modest improvement in labor-market conditions continue, as weekly jobless claims figures suggest, then the pace of economy contraction will probably ease somewhat this quarter. After declining over 6%, at annual rates, in each of the last two quarters, gross domestic product is expected to contract at a much slower rate this quarter, setting the stage for a return to growth later this year.
But so far, most of the so-called "green shoots" of recovery that economists and policymakers have latched onto are sentiment-based indicators such as consumer confidence and purchasing manager surveys.
The mix of grim automobile sales for April and ongoing steep job cuts suggest that consumers still face considerable headwinds.
According to Friday's report, hiring last month in goods-producing industries fell by 270,000. Within this group, manufacturing firms cut 149,000 jobs, bringing the total since the recession began to 1.6 million.
Construction employment was down 110,000 last month.
Service-sector employment fell 269,000. Business and professional services companies shed 122,000 jobs, the sixth-straight six-figure loss, and financial-sector payrolls were down another 40,000.
Retail trade cut 46,700 jobs, while leisure and hospitality businesses shed 44,000 as households cut back on nonessential spending. Temporary employment, a leading indicator of future job prospects, fell by more than 62,000 a slight improvement from the previous month's fall.
As has been the case throughout much of the recession, the sole bright spot among private sector industries was health care, which added almost 17,000 new jobs.
The government added 72,000, "mainly due to hiring of temporary workers in preparation for Census 2010," Hall said.
The average workweek was unchanged at 33.2 hours. A separate index of aggregate weekly hours fell 0.6 percentage point to 100.3.
Wholesale Inventories Decline
Wholesale inventories fell 1.6% in March to a seasonally adjusted $411.7 billion, after falling a revised 1.7% during February, the Commerce Department's report said.
The Department in a report released last month had estimated February inventories fell 1.5%. The February drop in inventories is the largest on record.
The March drop in inventories is more than the 1.2% decline analysts had expected and indicates wholesalers are drawing down inventories as shipments to retailers remain weak.
Sales of U.S. wholesalers dropped 2.4% in March to a seasonally adjusted $310.9 billion after a downwardly revised 0.2% increase in February, the data showed. Originally, February sales were estimated to have gained 0.6%.
The inventory-to-sales ratio, a measure of the number of months it would take a business to deplete its current inventory, increased slightly to 1.32 from 1.31 in February. The March 2009 figure is above the March 2008 ratio of 1.12.
On a year-over-year basis, sales were down 18.1% in March, while inventories were down 3.5%.
Wholesalers' inventories of durable goods -- a category that includes cars, appliances and furniture -- fell 2.4% in March, after falling a revised 2.6% in February.
Sales of durable good fell 3.3% in March, on the heels of a revised 1.7% increase in February.
Auto stocks fell 5.0%, while auto sales declined 0.6%. That compares with a 7.9% drop in auto stocks in February amid a downwardly revised 3.5% increase in sales.
Lumber sales in March fell 3.1%, while furniture sales fell 2.5%.
Non-durable goods inventories fell 0.3% in March, following a 0.2% drop the month before. March non-durable goods sales fell 1.6%, after dropping a revised 0.9% in February.
Petroleum stocks rose 7.9% amid a 5.1% decrease in sales. Farm product inventories rose 4.7%, while sales fell 3.9%.
—Meena Thiruvengadam contributed to this article.
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