WASHINGTON — The economy showed unexpected signs of resilience Friday as job losses slowed and the dollar gained a bit of muscle for a change, and there were even indications that food prices might be easing. The unemployment rate dipped, though that might not last.
The latest barometers flashed encouraging signs that the economic slowdown might not be as pronounced as some had feared. Still, there’s much caution — about housing, credit and other problems.
“Economic or financial conditions could take an unexpected stumble at any time,” warned Stephen Stanley, chief economist at RBS Greenwich Capital.
Employers eliminated 20,000 jobs in April — not nearly as many as the 81,000 in March, and the fewest monthly losses so far this year, the Labor Department reported. The unemployment rate dropped to 5 percent, from 5.1 percent.
Stresses were still evident. It was the fourth straight month that employers cut jobs — bringing total losses to 260,000.
Many analysts had been bracing for much more carnage. Yet, the new figures “can’t be taken as a signal that the economy is out of the recession woods,” said Nigel Gault of Global Insight.
Wall Street, dollar gain
On Wall Street, investors initially responded enthusiastically to the employment news, with the Dow Jones industrial average rising more than 100 points, but the market gave back part of that gain and closed up 48.20 points. Investors were keeping their euphoria in check, especially because stocks already had shot nearly 190 points higher Thursday.
Still, the tone in the market was clearly more upbeat.
Thursday’s advance came on a growing sense that the economy isn’t as wounded from the credit crisis as many people have feared.
Investors were also reassured by the dollar’s show of strength last week. The greenback’s latest gains have come on expectations that the Federal Reserve is likely to hold interest rates steady — a trend that makes U.S. assets more attractive to overseas buyers.
The U.S. currency rose last week to a five-week high against the euro.
In turn, the dollar’s advance has had an impact in the commodities market. Food prices — such as for wheat and soybeans — eased. And although oil did rise Friday, that was because of supply concerns rather than moves in the dollar.
“Things are a little brighter,” Ken Mayland, president of ClearView Economics, said of all the developments. “The economy is seen as doing a little bit better,” and that is contributing to the stronger dollar and calmer food prices, he said.
Cautious view cuts jobs
President Bush expressed hope Friday that the economic-stimulus rebates beginning to reach taxpayers will help lift activity.
“This economy is going to come on. I’m confident it will,” Bush said.
Businesses are handing out pink slips as they cope with an economy that is teetering on the edge of a recession, or possibly in one already. A severe housing slump, harder-to-get credit and financial turmoil have forced people and businesses to be more cautious in their spending. And that has hurt the economy.
To help relieve credit problems, the Federal Reserve announced Friday it would boost the availability of short-term loans to commercial banks to $150 billion in May from the $100 billion supplied in April. The goal is to supply a source of cash to squeezed banks so that they’ll keep lending.
On the employment front, construction companies, manufacturers, retailers, mortgage brokers and temporary help firms were among those shedding jobs in April. Those losses eclipsed gains elsewhere, including education, health, hotels and motels, bars and restaurants, and the government.
All told, there were 7.6 million people unemployed as of April, up from 6.8 million a year earlier.
