Employers are letting up on the mass layoffs they resorted to earlier this year to cope with the recession, but the unemployment rate is climbing because many businesses remain wary of hiring given all the economic and financial uncertainties.
The US Labor Department yesterday was to release a report expected to show that 620,000 jobs were lost last month. If analysts are correct, the figure — while still big — would be an improvement from March’s 663,000 lost jobs and mark the fewest reductions since November.
The deepest job cuts of the recession, which started in December 2007 and is now the longest since World War II, came in January: 741,000 jobs vanished then, the most since the fall of 1949.
“I think the worst has passed in terms of losses,” said John Silvia, economist at Wachovia. “But the jobs situation will remain tough.”
With few places for the out-of-work to land, the unemployment rate is expected to jump to 8.9 percent, from 8.5 percent in March.
If that happens, it would mark the highest jobless rate since the fall of 1983, when the country was recovering from a severe recession that drove unemployment past 10 percent.
As the recession eats into sales and profits, companies have turned to layoffs and other cost-cutting measures to survive the storm, including holding down workers’ hours, and freezing or cutting pay.
Looking ahead, economists expect monthly job losses to continue for most — if not all — of this year. However, they are hoping the reductions won’t be as deep.
Federal Reserve Chairman Ben Bernanke earlier this week gave his most optimistic prediction yet about the end of the recession, saying he expects the economy to start growing again this year — although the comeback could be weak and more jobs would disappear even after a recovery takes hold.
Companies will have little appetite to ramp up hiring until they feel the economy is truly out of the woods and a recovery is firmly rooted.
Against that backdrop, many economists predict the unemployment rate will hit 10 percent by the end of this year. Bernanke stopped short of that figure, saying it would be somewhere in the 9 percent range. Regardless, both private economists and Bernanke agree the unemployment rate will keep climbing into next year.
The Fed says unemployment will remain elevated into 2011.
Economists say the job market may not get back to normal — meaning a 5 percent unemployment rate — until 2013.
More than 5 million jobs have disappeared in the recession, and Bernanke predicted “further sizable job losses” in the coming months.
Fallout from housing, credit and financial crises — the worst since the 1930s — has hurt US workers and companies, and will continue. The jobs market traditionally doesn’t rebound until well after an economic recovery starts.
The Labor Department on Thursday said the number of newly laid-off workers filing applications for jobless benefits dropped to the lowest level in 14 weeks, a possible sign that the massive wave of layoffs has peaked. Still, the number of unemployed workers drawing benefits climbed to a new record — 6.35 million.
Other reports showed sales at many retailers fared better last month, with Wal-Mart Stores Inc leading the way.