The first important economic signpost reached in this quarter, the April jobs report, could hardly have been more confusing.
The unemployment rate fell to a 28-year low of 4.3% while wages rose, but evidence also surfaced that the industrial sector of the nation's economy is weakening rapidly in reaction to the Asian crisis.
The Federal Reserve is surely under more pressure to raise interest rates at its monetary policy session May 19. But almost as surely, most economists think it will not do so, remaining in its wait-and-see mode.
The mixed data let Fed Chairman Alan Greenspan "buy a little more time in fending off the Fed's inflation hawks but not much," said economist Scott J. Brown of Raymond James & Associates, St. Petersburg, Fla.
"On balance, the report increases the pressure on the Fed to tighten," said Bruce Steinberg, chief economist at Merrill Lynch & Co., "but we believe they are willing to wait for more information."
"As always, we should be cautious about putting too much weight on any one month's data," emphasized Katharine Abraham, head of the Bureau of Labor Statistics. The jobless rate had been steady for the prior few months, she noted.
In April, 5.9 million people were jobless and seeking work, compared with 6.5 million the preceding month. Employment gains were spread across all sectors-adult men and women, teenagers, blacks, whites, and Hispanics.
Reflecting a tight labor market, unemployment among those with only a high school diploma also fell.
Meanwhile, however, the new-job data hinted that the labor market is actually not growing as explosively as last year.
About 262,000 jobs were created in April, bringing the monthly average payroll gain this year to 224,000, "a sharp contrast to the 300,000 pace in the last six months of last year," Mr. Brown said.
"Gains were moderate for most industries in April with noticeable softness in manufacturing," he said. Hours worked fell 0.4%, and manufacturing hours plummeted 2.7%, most likely because the Labor Department did not adjust the data for Good Friday.
"However, manufacturing has been exhibiting a weak trend in the last few months," Mr. Brown said.
"Even after accounting for Easter, manufacturing hours would have declined about 0.6%," Mr. Steinberg said.
Industrial production almost certainly declined in April, the third decline in four months."
"U.S. exports are obviously weakening rapidly," he said. "Manufacturing inventories are also building at a rapid rate. Further industrial-sector weakness will be occurring."
The decline in the jobless rate was "a statistical quirk," Mr. Steinberg added.
"The labor force supposedly shrank by 280,000 people, hardly what one would expect in a tight labor market. We think the rate will pop up in the next employment report."
Average hourly earnings rose 4 cents, to $12.67, putting the yearly increase in earnings at 4.4%. That will surely be of concern to the Fed's inflation hawks.
Edward Yardeni, chief economist at Deutsche Morgan Grenfell, noted that 4.4% yearly wage growth is the "highest since 1983."
Still, he said he feels higher labor costs are likely to slow corporate profits but not fuel inflation because most companies lack the power to raise prices.