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Economy shows resilience

Jobless rate falls as dollar rises

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| Saturday, May 3, 2008 12:19 AM CDT | () comments

The Associated Press

WASHINGTON (AP) — The economy showed off unexpected signs of resilience Friday as job losses slowed, the dollar gained a bit of muscle for a change and there were even indications that food prices may be easing. The unemployment rate dipped, though that may not last.

The latest barometers flashed encouraging signs that the economic slowdown may 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 were 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.

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 since stocks had already shot nearly 190 points higher on 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 this 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 this 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 while oil did rise Friday, that was because of supply concerns rather than moves in the dollar.