Employers cut payrolls less than expected

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.

Meanwhile, zooming energy and food prices are taking a bite out of paychecks. If the job market continues to falter, wage growth probably will slow, too, making people even less inclined to spend. That would spell further trouble for the economy.

The payrolls figure and the unemployment rate come from two different statistical surveys, which can provide — as in Friday’s case — a somewhat conflicting picture of what is happening in the labor market.

The seasonally adjusted overall civilian unemployment rate — 5 percent in April — is based on a survey of 60,000 households. It showed that 362,000 people said they found employment last month, outpacing the number of people who couldn’t find work.

Economists tend to put more stock, however, in the much broader business survey of 400,000 work sites that is used to calculate the payroll figures.

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.

The new employment report “will make the Fed feel more comfortable about the pause in rate cuts ... but can’t be taken as a signal that the economy is out of the woods,” said Nigel Gault, economist at Global Insight.

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.

Employers often are reluctant to beef up hiring until they feel certain that any such recovery has staying power.

Democrats in Congress insist more relief needs to be provided, including additional unemployment benefits to cushion the pain of joblessness. The administration has resisted, saying the rebates and other stimulative efforts should be sufficient once they fully kick in.

Sen. Charles Schumer, D-N.Y., said he doesn’t want the administration to view the new employment figures as a “green light” for not supporting more relief.

Fed Chairman Ben Bernanke and his colleagues acknowledged Wednesday the fragile state of the economy, saying hiring conditions “have softened further.”

The economy advanced at a snail’s pace of just 0.6 percent in the first three months of this year as people and businesses clamped down on their spending. It marked the second quarter in a row of such feeble growth.

A growing number of economists believe the economy is in a recession and is indeed contracting now.

Under one rough rule, if the economy contracts for six straight months it is considered to be in a recession. That didn’t happen in the last recession — in 2001— though. A panel of experts at the National Bureau of Economic Research that determines when U.S. recessions begin and end uses a broader definition, taking into account income, employment and other barometers. That finding is usually made well after the fact.

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