Monday, May 5, 2008

Job losses slow in April, CUs will see impact

MADISON, Wis. (5/5/08)--The economy lost just 20,000 jobs in April, following job losses that totaled a revised 240,000 during the first three months of the year, the Labor Department reported Friday (see chart). And credit unions are seeing the effects.

The unemployment rate, which is based on a separate survey, edged down to 5% from 5.1% in March.Employment continued to decline in construction, manufacturing, and retail trade in April. The construction sector lost 61,000 jobs. Employment in that sector has plunged by 457,000 since peaking in September 2006.

"The latest employment data confirm that the U.S. economy has stalled and that any growth in output is being generated by rising labor productivity and not an increase in the number of jobs," said Steve Rick, senior economist with the Credit Union National Association (CUNA).

"The weak labor market has pushed consumer confidence levels down to the range normally associated with a recession. This led to a large drop in durable goods spending by consumers in the first quarter of 6.1%, the biggest drop in over two years," Rick said.

"Credit unions are seeing the effects of this weak labor market and drop in spending in their auto loan portfolios which declined 3.4% in the first quarter," Rick added.

"On a brighter note, credit union fixed-rate first mortgage loan balances rose 5.6% in the first quarter, more than twice the 2.3% pace set in the first quarter of 2007, as credit unions took advantage of tighter underwriting standards at other lending institutions," he said.

Manufacturing employment fell by 46,000 last month and has fallen by 326,000 over the past 12 months. Employment in retail trade declined by 27,000 in April. The retail sector has lost 137,000 jobs since peaking in March 2007.

Employment in health care continued to rise in April, with an increase of 37,000 jobs. The health care sector has added 365,000 jobs over the past 12 months.

The average work week fell to 33.7 hours, from 33.8 hours in March. Workers' average hourly earnings edged up just one cent to $17.88 in April.

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