WRAPUP 7-US hiring slows, spells trouble for economy, Obama

Fri May 4, 2012 5:31pm EDT

Related Topics

* Nonfarm jobs increase 115,000 in April
    * Unemployment rate edges down to 8.1 percent
    * Private sector payrolls grow 130,000


    By Jason Lange	
    WASHINGTON, May 4 (Reuters) - U.S. employers cut back on
hiring in April and more people stopped looking for work,
troubling signs for President Barack Obama whose re-election
prospects could hinge on his handling of the economy.	
    Employers added 115,000 workers to payrolls last month, the
Labor Department said on Friday. It was the third straight month
in which hiring had slowed, intensifying fears the U.S. recovery
is losing momentum.	
    Even a slight drop in the unemployment rate to 8.1 percent
had a dark tone because the fall was due entirely to people
dropping out of the workforce.	
    "The bottom line is you don't have evidence that this
economy has reached escape velocity," said Robert Tipp, an
investment strategist at Prudential Fixed Income.	
    Analysts had expected 170,000 new jobs in April, and the
shortfall could open the door a bit wider for the Federal
Reserve to step up efforts to help the economy.	
    Major U.S. stock indexes tumbled, with the broad S&P
index ending down more than 1.5 percent and yields on benchmark
U.S. government bonds sliding to lows not seen in
months. 	
    Still, the report was not all negative. The government
revised upward earlier estimates for payroll growth in February
and March by a combined 53,000 jobs.	
    	
 	
   	
    POLITICAL ECONOMY	
    The report could rattle nerves at the White House. Weak U.S.
growth and high unemployment create a formidable headwind for
Obama, who entered office during the darkest days of the 2007-09
recession.	
    Obama, who will hold his first campaign rallies on Saturday,
said he would urge Congress next week to implement "common-sense
ideas" to accelerate job growth.	
    "We've got to do more if we're going to recover all the jobs
lost in the recession," he told a group of students in the
Washington suburb of Arlington, Virginia.	
    His Republican challenger, Mitt Romney, repeated accusations
that Obama has not done enough to help Americans get back to
work. "We seem to be slowing down, not speeding up. This is not
progress. This is very, very disappointing," he told Fox News.	
    The unemployment rate, which soared to as high as 10 percent
during Obama's first year in office, held near 9 percent for
most of last year before falling sharply over the winter.	
    The decline had raised hopes that the economy had turned a
corner. Those hopes dimmed on Friday.	
    Even with the latest decline, the jobless rate remains about
2 percentage points higher than its average over the last 50
years, and the Fed thinks the labor market probably won't be at
full health until at least after 2014.	
    Fed Chairman Ben Bernanke said last month the U.S. central
bank is providing enough support for the economy but kept open
the possibility of a fresh round of bond purchases to lower
borrowing costs should the economy weaken.	
    "They obviously are going to be on guard now that employment
growth is not picking up," said Sean Incremona, an economist at
4Cast. 	
    	
    UNDER PRESSURE	
    Many economists think the weakness evident in the labor
market over the last few months is largely payback for stronger
hiring during a mild winter. That would temper fears the economy
is losing steam. 	
    Still, the employment report included several ominous
numbers. The participation rate, a measure of how many Americans
are looking for work, fell to a 30-year low at 63.6 percent of
the population.	
    The retirement of baby boomers has helped push that rate
lower but many people also have stopped looking for work because
they are discouraged by a sour jobs market. People must be
actively seeking work to count as part of the labor force.	
    The report also showed government payrolls contracted by
15,000, the biggest loss since November. Public payrolls have
been under pressure as politicians worry about heavy debt loads
and lackluster tax revenues.	
    The private sector added 130,000 new positions, with
manufacturing adding a strong 16,000 jobs. Jobs in
transportation and warehousing shrank by almost 17,000.
FILED UNDER: