US hiring slows in April as jobless rate lowers to 8.1%

By Jason Lange ,Reuters

WASHINGTON — U.S. employers cut back on hiring in April and the jobless rate fell as people gave up the hunt for work, a somber note on the economy that could hurt U.S. President Barack Obama’s re-election chances. Employers added just 115,000 workers to their payrolls last month, the Labor Department said on Friday. It was the second straight month in which hiring slowed, keeping fears alive that the U.S. economy is losing momentum. It also dampens hopes that a stretch of strong winter hiring signaled a turning point for the recovery. “It shows sluggish growth,” said John Doyle, currency strategist at Tempus Consulting in Washington. The unemployment rate ticked a tenth of a point lower to 8.1 percent, a three-year low, as people left the workforce. The jobless rate is derived from a separate survey of households, which showed a drop in the number of jobs in April. Still, the report was not all negative. The government revised upward its initial estimates for payroll growth in February and March by a combined 53,000. That left the six-month average of job growth at 197,000, nearly exactly where it would have been had April job growth come in as expected at 170,000. The unemployment rate, which soared to as high as 10 percent during Obama’s first year in the office, held near 9 percent for most of last year before falling sharply over the winter. Still, it remains about 2 percentage points higher than its average over the last 50 years, and the U.S. Federal Reserve thinks the labor market probably will not post a full recovery for at least another several years. Fed Chairman Ben Bernanke said last month the central bank is providing enough support for the economy but kept open the possibility of easing monetary policy should the economy weaken. “I don’t think Fed policy is going to change at this point,” said Sean Incremona, an economist at 4cast. “They obviously are going to be on guard now that employment growth is not picking up and is more likely to slow.” So far this year, the labor market has given mixed signals.

During the winter, fast growth in payrolls led many analysts to think the economy was turning a corner. Then jobs growth slowed in March, fueling fears the recovery was losing momentum. Most economists think mild weather muddied the waters, boosting hiring in the winter but making spring look weaker because companies had pulled hiring forward. “It’s not that there’s something wrong with the economy. Employment just got ahead of itself,” said Robert Mellman, an economist at JPMorgan in New York. The report showed the private sector accounted for all the job gains in April, adding 130,000 new positions. Manufacturing registering another strong month, adding 16,000 jobs.