The economy is weak, as evidenced by a fourth consecutive month of job losses, but the numbers are not as bad as economists had feared.

American employers cut 20,000 jobs from their payrolls in April, while, the unemployment rate, which is determined by a different survey method, actually fell to 5 percent from 5.1 percent.

The decline was much less than the forecasted job losses of 70,000 for the month. March's loss was revised to 81,000 from 80,000, and February's was also revised upward slightly.

Construction and manufacturing were again the weakest sectors in the labor market. Construction jobs fell by 61,000, while manufacturing lost 46,000 jobs. Retailers cut 27,000 jobs. Temp jobs, sometime seen as an indicator of future job growth, fell significantly.

Employment in the service sector grew by 90,000, led by job gains in education, health care, and professional and business services.

The data illustrates the unusual nature of this recession. Spawned by the collapse of the housing boom and the credit mess generated by subprime mortgages, it has been a slow, constricting squeeze rather than the swift bust. Manufacturing, which can be devastated by a recession, has been relatively buoyed of late by the weak dollar, which helps American exports.

Given the continued uncertainty in the credit markets and the additional signs of weakness in housing, the course of this downturn is far from clear. The Federal Reserve cut its benchmark interest rate a quarter-point on Wednesday to stimulate economic growth. But, mindful of the risks of inflationary expectations building, monetary policymakers also hinted that it wanted to see the effects of its recent flurry of rate cuts begin to work through the economy before it acted again.

Still, the Fed is also worried about the chilling effects that the still-cold, if no longer frozen, credit markets are having on the overall economy.
 
Citing "persistent liquidity pressures in some term-funding markets," the Fed announced, just minutes before the jobs data, that it was increasing the size of its new auction facility that lends to banks at rates below the discount rate, to $150 billion from $100 billion.

The Fed is also expanding the size of swap agreements with the European Central Bank and the Swiss National Bank. More important, it is broadening the kinds of collateral it will accept from Wall Street banks in exchange for Treasury securities. The Fed will now accept triple-A-rated asset-backed securities, in addition to eligible mortgage-based securities and Fannie Mae and Freddie Mac paper.

In March, the central bank set up a new auction facility to make as much as $200 billion in Treasury securities available to Wall Street banks.

"The wider pool of collateral should promote improved financing conditions in a broader range of financial markets," the Fed said.

The stronger-than-expected jobs data and the Fed's expanded liquidity move are helping to drive U.S. stock-index futures and European markets higher.