Unemployment Eases Despite Rise In Rateby Tim Manni
This time around, Wednesday’s ADP private-sector payroll index did provide an accurate indication of what we could expect from today’s report released by the Labor Department. Just as the ADP index foreshadowed, the country, while continuing to lose substantial amounts its workforce, did so at the slowest pace in six months. Unfortunately, the unemployment rate rose to 8.9% — its highest level in over 25 years.
According to the Labor Department, 539,000 jobs were lost in April, 41,000 less than what economists surveyed by MarketWatch.com had predicted. While the slowing pace is a welcome improvement, employment analysts believe the unemployment rate will continue to rise throughout 2009, since joblessness is a “lagging” indicator.
Unemployment’s influence on wage increases wreaks havoc on those who remain employed. Working Americans are also forced to make spending sacrifices as many are saddled with pay cuts and unpaid vacations [link added below]:
Average hourly earnings rose 1 cent to $18.51 an hour, the smallest increase in three years.
“Soaring unemployment is depressing wage gains,” wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. That is “seriously bad news because without wage gains people can’t deleverage unless they cut spending deeply.”
Employed or unemployed — tell us how the job market has affected you.