Young Negotiators

Employers cut far fewer jobs in April than in recent months and the unemployment rate dropped to 5 percent, a better-than-expected showing that nonetheless reveals strains in the nation’s labor market. Applications for unemployment benefits last week fell much more than expected to 365,000, a decline of 18,000 from the previous week, the Labor Department reported.

For the fourth month in a row, the economy lost jobs, the Labor Department reported Friday. But in April the losses totaled 20,000, an improvement from the 81,000 reductions in payrolls logged in March. Job losses for both February and March turned out to be a bit deeper than previously reported.

The latest snapshot of the nationwide employment conditions — while clearly still weak — was better than many economists were anticipating. They were bracing for job cuts of 75,000 and for the unemployment rate to climb to 5.2 percent.

The unemployment rate, derived from a different statistical survey than the payroll figures, fell to 5 percent from 5.1 percent in March. That survey showed more people finding employment than those who didn’t.

Businesses are handing out pink slips as they cope with an economy that is teetering on the edge of a recession, or possibly in one already. A severe housing slump, harder-to-get credit and financial turmoil have forced people and businesses to be more cautious in their spending. And that has hurt the economy.

To help relieve credit problems, the Federal Reserve announced Friday that it would boost the availability of short-term loans to commercial banks to $150 billion in May from the $100 billion supplied in April. The goal is to supply a source of cash to squeezed banks so that they’ll keep lending to customers.

Voters are keenly worried about the country’s economic problems and so are politicians — in Congress, in the White House and on the campaign trail. There were 7.6 million people unemployed as of April, up from 6.8 million a year earlier.

Workers with jobs saw scant wage gains. Average hourly earnings for jobholders rose to $17.88 in April, a tiny 0.1 percent rise from the previous month. That was less than the 0.3 percent rise economists were forecasting. Over the last 12 months, wages have grown by 3.4 percent.

The weak labor market is making employers feel less generous with compensation. To limit damage to the economy, the Federal Reserve lowered interest rates on Wednesday, but signaled that its rate-cutting campaign could be drawing to a close.

Fed officials and the Bush administration are hoping that the Fed’s aggressive rate cuts since September plus the government’s $168 billion stimulus package — including tax rebates that started hitting bank accounts this week — will lift the country out of its slump in the second half of this year. Even if that happens, economists predict the unemployment rate will climb higher, hitting 6 percent early next year.

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