Jobless Rate Hits 6 Percent in April

The nation's unemployment rate (search) jumped to 6 percent in April and companies slashed jobs for the third straight month — particularly in manufacturing, airlines and retail — as the fragile economy continued to quash hiring prospects.

Last month's jobless rate was up two-tenths of a percentage point from March, with payrolls falling by 48,000, the Labor Department (search) reported Friday. Those figures matched economists' expectations.

The economy has lost more than half a million jobs in the past three months as the number of unemployed workers surged to 8.8 million. Nearly 2 million people have been jobless for 27 weeks or more.

The jobless rate has hovered at or near 6 percent for more than a year. The last time it was higher was in July 1994, when the rate was 6.1 percent as the country was emerging from a previous recession.

April's jobless rate increase was caused in part by 680,000 people returning to the labor force. The ouster of Saddam Hussein (search) 's regime in Iraq boosted Americans' confidence, sending many unemployed people back out to look for work. But their searches yielded little results because the economy wasn't healthy enough to create new jobs.

Even before the war, businesses were wary about making big spending and hiring commitments in a weak economy struggling toward recovery.

A big fear among economists is that consumers, whose spending accounts for two-thirds of all U.S. economic activity, will continue to keep their wallets closed as layoffs continue and hiring remains stagnant. That scenario would result in even more job losses.

Given the muddled economic environment, analysts think the Federal Reserve will continue to hold the federal funds rate at 1.25 percent, a 41-year low, when it meets next week.

Factories, which have been hardest hit in the recession, shed another 95,000 jobs in April. Those losses were widespread, with notable declines in motor vehicles, fabricated metals and electronics equipment.

In the services sector, employers added 25,000 jobs overall. Continued job losses in the airlines industry, which cut 18,000 jobs last month, held down overall gains. Overall, the air transportation category has lost 177,000 jobs since an employment peak in January 2001.

Also in the services sector, department stores cut 34,000 jobs last month. But those losses were partly offset by gains in restaurants and bars. Employment in amusement and recreation services fell 41,000, and hotels cut 20,000 jobs. Construction employment rose by 18,000.