Job Gains Trailing Forecasts Add to U.S. Slowdown Concern
American employers in April added the fewest number of jobs in six months and wages stagnated, adding to concern the almost three-year-old economic expansion is cooling.
The 115,000 increase in payrolls was less than forecast and followed a revised 154,000 gain in March that was larger than initially estimated, Labor Department figures showed yesterday in Washington. The median estimate in a Bloomberg News survey called for a 160,000 advance. Unemployment fell to a three-year low of 8.1 percent as people left the labor force.
“Employers are hiring, they’re just hiring at a very modest rate,” said Jonas Prising, president of the Americas at Milwaukee-based ManpowerGroup, a provider of temporary workers. “The current growth rate of employment is probably consistent” with economic growth of 2 percent, he said.
A slowdown in hiring, along with wage gains that are failing to keep pace with inflation, may make it difficult for consumers to boost their spending, which accounts for 70 percent of the world’s largest economy. The figures also represent a challenge for President Barack Obama, who was attacked by Republican opponent Mitt Romney’s campaign for his “failed economic record.”
The April increase in payrolls leaves the labor market 5 million jobs short of the 8.8 million lost as a result of the 18-month recession.
Stocks slumped yesterday, sending the Standard & Poor’s 500 Index to its worst week of the year. The S&P 500 dropped 1.6 percent to 1,369.10 at the close in New York. The yield on the benchmark 10-year Treasury note fell to 1.88 percent from 1.93 percent late the prior day.
Weakening consumer confidence is depressing sales at businesses like Tops American Grill, Bakery & Bar in Schenectady, New York. Evan Christou, the owner, said he would need to see a significant increase in sales for a sustained period before adding to his staff of 42 employees.
“We’re kind of consolidating and multitasking,” said Christou, 49. “In this market, it’s pretty much a wait-and-see attitude.”
Transportation and warehousing, government agencies and construction were among the areas cutting jobs in April, while factories added the fewest workers in five months, yesterday’s report showed. Bloomberg survey estimates for total payrolls ranged from increases of 89,000 to 210,000 after a previously reported 120,000 rise in March.
Private payrolls during Obama’s term in office turned to positive from negative in April, with a net gain of 35,000. Overall payrolls remain lower than when Obama was inaugurated because there are 607,000 fewer government workers, including federal, state and local employees.
Edward LaHaie, 52, of Powder Springs, Georgia, got a job in April as a regional sales manager for Rawal Devices Inc., a maker of control systems for industrial and commercial air conditioners. He had been out of work since November when he lost a similar sales job.
“There are always opportunities for someone who has skills,” he said. “It took a little longer than I would have liked. I was unemployed for 170 days and I counted every one of them.”
The data came a day before Obama formally opened his re- election campaign with rallies in the swing states of Ohio and Virginia. Romney has made the president’s stewardship of the economy a point of attack and polls show voters are focused on jobs and growth.
“From green jobs that never materialized to an unemployment rate that has remained above 8 percent for 39 straight months, President Obama’s rhetoric simply doesn’t match with his failed economic record,” Andrea Saul, a Romney campaign spokeswoman, said in a statement yesterday.
Alan Krueger, chairman of Obama’s Council of Economic Advisers, focused on 26 consecutive months of private job growth. April “provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression,” he said in a statement.
The Obama campaign is pointing to a revival in the auto industry to support his record.
Chrysler Group LLC, the automaker controlled by Fiat SpA, said it will accelerate the addition of 1,100 jobs and a third crew of workers by hiring them in November, pulling ahead plans for increasing production in early 2013.
Economists pointed to some bright spots in the report. Payroll gains for the prior two months were revised higher by a total of 53,000 jobs. Some of the slowdown may reflect unusually warm weather that boosted hiring early in the year.
“It’s very possible that hiring was pulled forward” due to a mild January and February, said Christophe Barraud, an economist and strategist at Market Securities Paris LLP, who correctly forecast April payrolls. “This report is not good, but we have to wait for the next one to see if the real trend is actually decelerating.”
The unemployment rate was forecast to hold at 8.2 percent, according to the survey median. It has exceeded 8 percent since February 2009, the longest such stretch since monthly records began in 1948.
The report also showed a drop in long-term unemployed Americans. The number of people out of work for 27 weeks or longer fell as a percentage of all jobless, to 41.3 percent.
Among those still looking for work is David Bouchey, of Aurora, Colorado, who lost his job as a financial analyst in 2007. He said he thought his years of experience and three post- graduate degrees would land him a job.
“I’m overqualified for almost every job I apply for,” said Bouchey, 54. He, his wife and two sons live on about $1,000 a month in public assistance. “I never thought the economy would be this bad.”
Average hourly earnings were $23.38 in April, little changed from the month before, the jobs report showed. It was the first time without an increase since August. Earnings rose 1.8 percent from April 2011, matching January’s 12-month increase as the smallest in a year. The average work week for all workers held at 34.5 hours.
Faster economic growth would help lay the groundwork for more hiring. The economy expanded at a 2.2 percent annual rate in the first quarter after a 3 percent pace the prior three months, according to Commerce Department data. Consumer spending grew 2.9 percent, the most in more than a year.
The U.S. labor market is still faring better than some of the other major economies. Joblessness in the 17-nation euro area increased to 10.9 percent in March, the highest since April 1997, from 10.8 percent a month earlier.
United Parcel Service Inc. (UPS), the world’s largest package- delivery company, is among firms taking note.
“During the quarter, the most positive news has come from the U.S. where indications of economic rebound are evident,” Scott Davis, chief executive officer of UPS, said on an April 26 conference call. “Retail sales have grown faster than expected and the employment environment has improved. On the other hand, economies in other parts of the world continue to face challenges.”
To provide some fuel for the economy, Federal Reserve policy makers last month repeated their plan to hold borrowing costs low through late 2014 to spur growth.
“The unemployment rate has declined but remains elevated,” Fed policy makers said in an April 25 statement. The group “expects economic growth to remain moderate over coming quarters and then to pick up gradually,” and “anticipates that the unemployment rate will decline gradually.”
Factory payrolls increased by 16,000, the smallest in five months. Construction companies cut jobs for a third straight month. Retailers added 29,300 employees, almost recouping losses in the prior two months. Employment gains at service-providers were the weakest since August. Government payrolls declined for the seventh month in the last eight.
The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- held at 14.5 percent.
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