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To: GST who wrote (124638)	5/5/2001 3:07:44 AM
From: H James Morris	Respond to of 164684

Published: May 4 2001 19:49GMT \| Last Updated: May 5 2001 00:05GMT US employers shed jobs in April at their fastest pace since the last ecession. Unemployment jumped to its highest level in 2½ years, in the strongest evidence yet that the steep slide in the US economy is far from over. The jobless rate rose to a seasonally-adjusted 4.5 per cent last month from 4.3 per cent in March, as non-agricultural payrolls slumped by 223,000. It was the second straight monthly decline and the largest since February 1991. The figures, reported on Friday by the Labour Department, seemed almost certain to keep the Federal Reserve on track to maintain the pace of its aggressive interest rate cuts at the next meeting of its policy-making open market committee on May 15. US financial futures markets indicated that investors now expect another half point cut in the fed funds rate at that meeting, which would make it the fifth reduction this year. The markets put a brave face on the figures with the dollar recovering lost ground after an initial half-cent fall against the euro, while US equities erased early losses and ended higher. Analysts said this stoic response reflected optimism that rate cuts from the Fed would rescue the economy. "There is a 'don't fight the Fed' mentality in the market," said Ray Attrill, director of research at economic consultancy 4Cast. The US central bank cut the rate two weeks ago to 4.5 per cent in a surprise move between regularly scheduled meetings of the FOMC, and officials have reiterated since then their continuing concern about the prevailing economic weakness. But that concern is in sharp contrast to a mood of growing optimism on Wall Street. Positive sentiment was fuelled by a report from the Commerce Department that said gross domestic product actually increased in the first three months of the year at an annual rate of 2 per cent. Officials at the central bank have cautioned privately that the figures were highly provisional and subject to important revisions as more data about the first quarter are collected. And what growth there was in the first three months of the year was heavily concentrated in the early part of the quarter. Employment, for example, rose by 289,000 in January, but was more tepid in February. Much of the apparent strength of the economy has been the result of continuing robust consumer spending, which grew at an annual rate of 3 per cent in the first quarter. Consumers have been resilient in the face of falling equity prices but may be tested harder by the evident weakness in the labour market. History suggests consumer demand is more closely tied to employment prospects than stock prices, and Friday's figures may point to a softening in demand in the months ahead. Most troubling in Friday's report was the news that, for the first time in the current downturn, job losses were widespread across the economy. Over the last year, payroll reductions have been confined to the manufacturing sector, which has been besieged by the strong dollar and higher energy costs. But in April, service sector employment dropped by 59,000, with an especially steep fall of 104,000 in business services. One bright sign for the economy has been the housing market, where demand remains brisk. But here, too, there were troubling signs in Friday's Labour Department report, with a fall in construction jobs in April.