US joblessness hits eight-year high

Jobs are increasing again in service industries

Unemployment in the United States hit 6% in April, its highest level since August 1994, official figures showed.

The increase was worse than expected, topping economists' forecasts for an unemployment rate of 5.8%, up from 5.7% in the previous month.

But the figures also confirmed that the world's largest economy is seeing the beginnings of a recovery.

The gradual recovery in the US economy was reflected in the creation of 43,000 new jobs, the Labor Department said.

New workers

It was the first time for nine months that more workers have found jobs than lost them - but the high number of workers entering the job market for the first time meant that was not enough to stop the jobless total rising.

The Labor Department welcomed the new jobs as a sign that the world's largest economy is on the mend after US firms slashed hundreds of thousands of staff in the aftermath of the 11 September catastrophe.

Nonetheless, the job creation figure fell short of economists' expectations by about 12,000.

There were further signs of a recovery in the US's service sector, which makes up the bulk of the US economy.

The sector grew for a third straight month in April, but at a slower rate than the previous two months, figures from the Institute for Supply Management (ISM), an industry trade group, showed.

The ISM's monthly non-manufacturing index fell in April to 55.3 from 57.3 in March - with a figure above 50 inndicating expansion in the non-industrial area of the economy that includes everything from transportation to legal and financial services.

The services sector recruited 87,000 new staff in April.

More than a quarter of a million workers in services industries lost their jobs in the two months following the September terrorist attacks.

Recession

An increase in temporary jobs - up 66,000 - was also greeted as sign of recovery by economists as many firms hire new staff on a short-term basis till they are sure market conditions have improved.

Economists have predicted unemployment will continue to rise until at least mid-year and may go as high as 6.5% before starting to fall again.

The US economy went into recession in March last year but has begun growing again - by a healthy 5.8% in the first three months of this year.

The US the dollar fell to its weakest level for six months against the euro and for two months against the yen on Thursday, pushed down my doubts over the strength of the recovery ahead of Friday's unemployment figures.

The dollar fell further following the worse than expected figures - down from 1.4658 for one pound sterling to 1.46742 at 1400GMT.

The Nasdaq was down 11.64 points to 1633.18, while the Dow Jones index fell 23.72 to 10068.35.