US employers cut far fewer jobs last month than in recent months and the unemployment rate dropped to five per cent, a better-than-expected showing that nonetheless reveals strains in the nation’s labor market.

For the fourth month in a row, the economy lost jobs, the Labor Department reported yesterday. But in April the losses totaled 20,000, an improvement from the 81,000 reductions in payrolls logged in March. Job losses for both February and March turned out to be a bit deeper than previously reported.

The latest snapshot of the nationwide employment conditions – while clearly still weak – was better than many economists were anticipating. They were bracing for job cuts of 75,000 and for the unemployment rate to climb to 5.2pc.

The unemployment rate, derived from a different statistical survey than the payroll figures, fell to 5pc from 5.1pc in March. That survey showed more people finding employment than those who didn’t.

Businesses are handing out pink slips as they cope with an economy that is teetering on the edge of a recession, or possibly in one already. A severe housing slump, harder-to-get credit and financial turmoil have forced people and businesses to be more cautious in their spending. And that has hurt the economy.

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In other economic news, the Commerce Department reported that orders to US factories rose a bigger-than-expected 1.4pc in March, after two straight months of declines.

On the jobs front, construction companies slashed 61,000 positions last month. Manufacturers cut 46,000 and retailers got rid of 27,000. Those losses were eclipsed by job gains in education and health care, professional and business services, the government and elsewhere.

The job losses came in areas hardest hit by the housing and credit debacles. The fact that fewer job cuts were ordered last month raised hopes that damages could be limited.

“A decline in job growth is never welcome but the economy does seem to be showing some resilience,” said White House spokesman Tony Fratto.

Echoing that sentiment, Commerce Secretary Carlos Gutierrez said the new job figures are “sort of bittersweet – better than expected but we’re still going through a difficult first half.”

Voters are keenly worried about the country’s economic problems and so are politicians – in Congress, in the White House and on the campaign trail.

Workers with jobs saw scant wage gains.

Average hourly earnings for jobholders rose to $17.88 last month, a tiny 0.1pc rise from the previous month. That was less than the 0.3pc rise economists were forecasting. Over the last 12 months, wages have grown by 3.4pc.