Companies add jobs as unemployment rate falls to 5.6 percent

Leigh Strope

Friday, May 7, 2004 | 9:42 a.m.

WASHINGTON -- Employers added 288,000 jobs to their payrolls in April as the nation's unemployment rate fell to 5.6 percent, reinforcing hopes for a sustained turnaround in the jobs market that had lagged for so long.

Payrolls have risen now for eight straight months, with 867,000 new jobs created so far this year, the Labor Department reported Friday. The strengthening jobs market comes just in time to aid President Bush's re-election efforts, which were in question a few months ago based on his economic record.

Bush is on track to be the first president since the Great Depression to have lost jobs under his watch. But the hiring gains in recent months have shrunk those losses to about 1.5 million.

Hiring was widespread last month, with the service sector leading the way. Professional and business services employment rose substantially, by 123,000. In that category, gains were in employment services, including temporary help firms, services to buildings and dwellings, management and technical consulting services and architectural and engineering services.

The nation's struggling factories also appear to be turning around. Based on Labor Department revisions, the manufacturing sector added jobs for three straight months, including 21,000 in April. For the year, manufacturing payrolls are up by 27,000 overall.

The unemployment rate fell 0.1 percentage point to 5.6 percent last month, after reaching a high of 6.3 percent in June 2003 during the economic downturn.

Revisions to payrolls also showed a stronger jobs market than previously reported. Last month's 308,000 payroll gains were revised up to 337,000. April's showing surprised analysts, who had expected payrolls of about 180,000 to 200,000.

The economy has rebounded strongly, but companies, under intense pressure to compete globally, have been holding down their costs by working employees harder instead of hiring new ones. That appears to be changing, though critics note that job gains are occurring in the lower-paying service sector at retailers and restaurants, and in temporary employment firms.

The Federal Reserve decided Tuesday to hold a key interest rate at a 46-year low of 1 percent, saying such low rates along with productivity gains are helping to support economic activity.

But the strengthening jobs market leads economists to anticipate the first rate increases in more than four years will start this summer.

Other gains in April occurred in retail at building and garden supply stores, general merchandise stores and motor vehicle and parts dealers. The leisure and hospitality sector also added jobs, especially in the category of food services. Hiring also continued to be strong in health care and social assistance for the month.