BBC Friday, 4 May, 2001, 12:38 GMT 13:38 UK

Shock rise in US jobless

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.

Businesses cut 223,000 jobs during the month, 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.

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

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.

-- Anonymous, May 04, 2001