Unemployment in US increases to 6% high despite signs of economic upturn

Despite strong signs that the US economy is recovering, unemployment in April hit a 7½-year high at 6 per cent. The rise took place despite a 43,000 rise in those on company payrolls and as the services sector, the key indicator of growth, showed an extra 87,000 at work.

The figures, reflecting a traditional lag between an upturn in economic activity and in job numbers, are seen here as a clear indication that Mr Alan Greenspan and the Fed will not raise interest rates when it meets on Tuesday.

The economy sprinted out of recession with a 5.8 per cent growth rate in the first quarter of this year. But analysts estimate the recovery has slowed in the current quarter and they project economic growth at a 3-3.5 per cent rate.

The growth is not yet sufficient to absorb the 565,000 people who entered the workforce during April and unemployment is still expected to rise to about 6.5 per cent in June.

The construction industry also shed 79,000 jobs. Manufacturing - hardest hit by the recession - cut employment by 19,000 in April. But job losses in the battered industry show signs of moderating.

The industry's job losses averaged 37,000 a month from February to April, compared with average monthly losses of 119,000 from March 2001 to January.

Employment held steady in electronic equipment manufacturing, and rose slightly in industrial machinery, following more than a year of heavy job losses in both industries.

But figures released on Thursday show new orders for factory goods beat expectations in March, while those for February were better than previously reported.

The Commerce Department said the value of new manufactured goods rose 0.4 per cent to a seasonally adjusted $318.5 billion (€348.5 million) in March, better than Wall Street economist predictions for an increase of only 0.1 per cent.