May 8--Updated: 05/08/2009 11:02:35 PM PDT

The nation's unemployment rate reached a quarter-century high of 8.9 percent in April, the U.S. Labor Department reported Friday, but economists say slowing job losses may signal an easing of the recession.

The jobless rate was up from 8.4 percent of the work force in March, as nonfarm payrolls shrank by 539,000 jobs -- much less than the 620,000 forecasters expected and sharply down from the 699,000 jobs lost in March.

The slowing rate of job loss was a small bit of good news amid the bad for those hoping for the recession's end this year.

But there was no gilding the numbers.

"This was a horrible report," said Heidi Shierholz, economist with the Economic Policy Institute in Washington, D.C. "We lost 539,000 jobs. At any other time than this recession we are in, this would have been considered appalling.

"But before things turn around, they have to get less bad. That's what we're seeing."

President Barack Obama on Friday announced several steps to make it easier for those looking for work to retrain without losing jobless benefits. In a speech, he said Friday's report "underscores the point that we're still in the midst of a recession that was years in the making and will be months or even years in the unmaking; and we should expect further job losses in the months to come."

But, he said, "the gears of our economic engine are slowly beginning to turn."

Government hiring

class="bodytext">The April report would have been worse without an increase of 66,000 jobs in the federal government, much of it because of hiring for the 2010 U.S. Census. The health care sector also added 17,000 jobs.

Private sector employment shrank by 611,000 jobs, and forecasters expect losses to continue for months. The Labor Department's Bureau of Labor Statistics also revised its March figures to reflect an additional 69,000 private-sector jobs lost.

The last time U.S. unemployment was higher was September 1983, when the rate reached 9.2 percent.

"In absolute terms, the numbers are not good," said Nigel Gault, chief U.S. economist for IHS Global Insight in Lexington, Mass., "but they were much, much worse just a couple months ago."

IHS is forecasting a second-quarter decline in the nation's gross domestic product of 2.5 percent and a "teeny bit of growth" toward the year's end, Gault said. This would be a vast improvement in an economy that shrank by 6.1 percent in the first quarter of this year.