BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

The BBC's Mandy Baker
"On the evidence of the employment market it seems the slow down in the US economy is intensifying"
 real 56k

The BBC's Andrew Walker
"The jobs market will be a key factor for the wider economic outlook"
 real 28k

Friday, 4 May, 2001, 20:38 GMT 21:38 UK
Shock rise in US jobless
US auto worker
Work is becoming harder to find in the United States
US unemployment rose to 4.5% in April, the highest level in two and a half years, as the country's economic slowdown deepens.

The news sent US stocks tumbling in early trade before they picked themselves up, with the Dow closing 154 points higher at 10951 and the Nasdaq gaining 45 to 2191.

The jobs data boosted the markets because it raised expectations of a further interest rate cut by the US central bank, the Federal Reserve, at its next meeting on 15 May.

The government figures showed businesses had cut 223,000 jobs in April, the largest reduction in workers on the payroll since the last recession in 1991.

The increase in both the unemployment rate and the cut in jobs surprised many analysts.

They had been predicting the unemployment would rise to 4.4% and that businesses would increase the number jobs during the month.

President concerned

President George W. Bush remains "very concerned" about the state of the US economy after the jobless data, said a White House spokesman.

"It is entirely possible that that 2.0% growth (for the first quarter) will be revised downward," he said.

The White House went on to use the weak jobs data to call on Congress to help boost the economy by enacting the administration's proposed tax cutting budget as soon as possible.

Interest rate

The Federal Reserve made a surprise interest rate cut by one-half point last month, the fourth reduction this year, in an attempt to ward off recession.

With the rise in unemployed, there are now fears consumer confidence and spending, which makes up two-thirds of all economic activity in the US, will be hit.

Average hourly earnings, a key gauge of inflation, rose by 0.4% in April, the same rise as in March.

The pool of available workers in the US is now at 10.77m.

Market falls

US and European stock markets fell on Thursday after weekly jobless figures showed the number of claimants was higher than expected at the end of last month, and a survey suggested company purchasing chiefs were tightening purse strings.

Adding to the gloom was an indication that the weakness in manufacturing had spreading to other sectors, as well.

The National Association of Purchasing Management (NAPM) said its monthly non-manufacturing index, which measures the service sector of the economy, fell to 47.1 in April from 50.3 in March. A number below 50 denotes contraction.

Search BBC News Online

Advanced search options
Launch console

Terror's impact

Signs of a slowdown

Rate cuts


Key players

See also:

06 Apr 01 | Business
Shock fall in US jobs
03 May 01 | Business
US service sector weakens
Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories