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Jobless rate edged down to 7.2% in April 1st fall in 9 months viewed as signal recovery is on track


WASHINGTON -- The nation's unemployment rate fell slightly last month, its first decline in nine months and the latest indication that a moderate and sustainable recovery is on track.

From a six-year high of 7.3 percent in February and March, the jobless rate fell to 7.2 percent in April, the government reported yesterday. It was hardly a dramatic reduction, but it was more than most economists expected and is expected to help fuel consumer confidence.

"It's really good reinforcement," said William F. Treacy, chief economist with MNC Financial Inc. in Baltimore. "This improvement is very much for real."

A weak job market has been at the core of the yearlong collapse in consumer confidence, Mr. Treacy said. "The way out of that is for the labor market to improve so people can look out their window and say 'Hey, things are OK,' " he said.

With the economy growing at an annual rate of 2 percent and sales to consumers and merchants up 4.8 percent in the first quarter, the stage was set for a drop in unemployment, as manufacturers and retailers replaced inventories after the buying surge in January and February.

"This to me shows that, finally, employers are beginning to gain the confidence and courage to hire people back more aggressively," said Sung Won Sohn, chief economist with Norwest Corp. in Minneapolis.

In yesterday's report, the Labor Department said that 126,000 jobs were created in April, more than enough to soak up the estimated 100,000 new workers who are entering the labor force each month.

"Any time we get employment gains above that [100,000 a month], we should be making some progress on unemployment," said Roger Brinner, chief economist with consultant DRI/McGraw-Hill in Massachusetts. Retail and housing demand earlier in the year are now spurring production, he said. "The goods that have been sold came from inventories. The sales will have to produce production and production will have to produce employment.

"But I think the president is still going to be looking at a [jobless] number pretty close to 7 [percent] when the voters head to the polls" in November, Mr. Brinner said. "We aren't going to be 6 or 6 1/2 percent."

One cause for concern is that historically, the economy grows at an annual rate of as much as 6 percent during recoveries but this time it is unlikely to exceed half that rate.

Sen. Paul S. Sarbanes, the Maryland Democrat who is chairman of the Joint Economic Committee, said the drop in unemployment was welcome but that the rate of job creation suggested it would take nearly six years to recover the number of jobs lost in the recession. In all previous recoveries since World War II, it took less than 12 months of economic expansion to recover all the jobs lost.

"If the administration considers a jobs recession to be an adequate economic recovery, then this nation is in for months and maybe years of high unemployment and extraordinary economic hardship," he said.

Another dour assessment came from Lawrence A. Hunter, chief economist with the U.S. Chamber of Commerce, who said there was still enough "ambiguity and sluggishness" in the employment figures to give the Federal Reserve Board "excellent reason" to ease interest rates.

Fed Chairman Alan Greenspan, widely criticized for failing to respond to the double-dip downturn last year, has said repeatedly that he stands ready to take action by lowering interest rates further if the economy shows signs of stalling again.

The unemployment reduction dovetails with an annualized growth estimate for the economy, as measured by the gross domestic product, of 3 percent for the rest of the year, according to Kathleen Stephansen, economist with Donaldson, Lufkin and Jenrette Securities Corp. of New York. The current level is 2 percent.

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