U.S. Part-Time Work Increases, Pushing Down Unemployment Rate
By Courtney Schlisserman
May 2 (Bloomberg) -- The drop in the U.S. unemployment rate in April partly reflected a jump in part-time workers, raising concern businesses are still scaling back, economists said.
The number of Americans saying they worked part-time last month due to economic reasons -- either because their hours were cut or they couldn't find full-time work -- jumped to 5.22 million from 4.91 million in March, the Labor Department reported today. That helped the jobless rate unexpectedly fall to 5 percent from 5.1 percent.
The 19 percent increase over the last six months in the number of people not working a full day because of slack business conditions is the biggest in six years. Fewer hours and smaller pay increases, just as food and fuel prices surge, may continue to undermine consumer spending.
``With goods employment still declining sharply, hours worked down, and part-time employment up, this report can't be taken as a signal that the economy is out of the recession woods,'' Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Massachusetts, said in a note to clients.
Consumer spending advanced at a 1 percent annual pace in the first quarter, the Commerce Department said April 30. That was the smallest gain since the last recession seven years ago.
Along with the drop in the unemployment rate, derived from a survey of households, today's government report also showed payrolls shrank by a smaller than forecast 20,000 workers. The latter is based on the Labor Department's poll of businesses.
Market Reaction
The figures pushed up yields on U.S. Treasury securities as traders bet the Federal Reserve will see less need to lower borrowing costs.
Other components from the report were less reassuring. The measure of unemployment that includes those working part-time for economic reasons rose to 9.2 percent in April, a three-year high, from 9.1 percent.
Wage gains were also meager. Average hourly earnings rose just 0.1 percent, pushing the increase in the year ended in April down to 3.4 percent higher, the smallest since January 2006.
``The weak labor income numbers in an environment of rising headline inflation present yet another challenge for the consumer spending outlook and put even more burden on the tax rebates to support outlays,'' Michael Feroli, an economist at JPMorgan Chase & Co. in New York, said in a note to clients.
Rebate Checks
The government started sending out tax rebate checks this week as part of its fiscal stimulus plan. Also this week, Federal Reserve policy makers lowered the benchmark overnight lending rate between banks by a quarter percentage point, to 2 percent, in a bid to revive the economy.
Economists surveyed by Bloomberg News last month forecast consumer spending, which accounts for two-third of the economy, would rise an average 0.5 percent in the first half of the year, the smallest two-quarter gain since the six months that ended March 1991.
Recent reports indicate spending weakened at the start of the second quarter. Cars and light trucks sold at a lower-than- forecast 14.4 million annual pace in April, the fewest since 1998, according to industry figures issued yesterday.
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