THE NUMBER: 8.1% – Added just 115,000 vs. 160,000 expected
Employers in the U.S. added fewer workers than forecast in April and the jobless rate unexpectedly declined as people left the labor force, underscoring concern the world’s largest economy may be losing speed.
Payrolls climbed 115,000, the smallest gain in six months, after a revised 154,000 rise in March that was more than initially estimated, Labor Department figures showed today in Washington. The median estimate of 85 economists surveyed by Bloomberg News called for a 160,000 advance. The jobless rate fell to a three-year low of 8.1 percent and earnings stagnated.
A slowdown in hiring as corporate optimism cools may restrain the wage growth needed to fuel consumer spending, which accounts for about 70 percent of the economy. Federal Reserve policy makers view unemployment as “elevated” and plan to hold borrowing costs low through late 2014.
“The labor market isn’t improving all that much,” Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte,North Carolina, said before the report. “Layoffs have slowed but hiring hasn’t really picked up. The next couple of months are going to be challenging. The Fed’s caution is well-placed.”
Transportation and warehousing, government agencies and construction all cut jobs in April. Bloomberg survey estimates ranged from increases of 89,000 to 210,000 after a previously reported 120,000 rise in March. Revisions added a total of 53,000 jobs to payrolls in February and March.
The jobs data come six months before Americans head to the polls to either re-elect President Barack Obama or choose Republican Mitt Romney, who has said White House policies have done little to help U.S. workers.
The unemployment rate was forecast to hold at 8.2 percent, according to the survey median. Estimates in the Bloomberg survey ranged from 8.1 percent to 8.3 percent. Unemployment has exceeded 8 percent since February 2009, the longest such stretch since monthly records began in 1948.
The participation rate, which indicates the share of working-age people in the labor force, fell to 63.6 percent, the lowest since December 1981, from 63.8 percent.
Private payrolls, which exclude government agencies, rose 130,000 after a revised gain of 166,000. They were projected to rise by 165,000, the survey showed.
Factory payrolls increased by 16,000, the smallest in five months and less than the survey forecast of a 20,000 increase.
Employment at service-providers increased 101,000 in April, the smallest gain since August. Construction companies cut 2,000 jobs and retailers added 29,300 employees.
Government payrolls decreased by 15,000. State and local governments employment dropped by 11,000.
Evan Christou, owner of Tops American Grill, Bakery & Bar in Schenectady, New York, said at this time he has no plans to add to his staff of 42 employees. His sales were up about 6 percent earlier this year before dropping off when gas prices went up. He said he would need to see a significant increase in sales for a sustained period before hiring more workers.
“We’re kind of consolidating and multi-tasking,” said Christou, 49. “In this market, it’s pretty much a wait-and-see attitude.”
Average hourly earnings were essentially unchanged, the weakest since August, at $23.38, today’s report showed. Compared with April of last year, earnings climbed 1.8 percent, matching January as the smallest in a year.
The average work week for all workers held at 34.5.
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.
The report also showed a drop in long-term unemployed Americans. The number of people unemployed for 27 weeks or more decreased as a percentage of all jobless, to 41.3 percent.
The number of temporary workers increased 21,100. Payroll at temporary-help agencies often slow as companies seeing a steady increase in demand take on permanent staff.
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, the Commerce Department reported last week. Consumer spending grew 2.9 percent, the most in more than a year.
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. Earlier this week, it also said four plants will skip normally scheduled two-week midyear shutdowns to meet increased demand.
Chrysler led the five largest automakers by U.S. sales in exceeding analysts’ estimates for April, reporting a 20 percent jump. Chrysler, Ford Motor Co. and Hyundai Motor Co. this week said they will add shifts at factories this year. General Motors Co. (GM), the top-selling automaker in the U.S., raised its forecast for full-year U.S. light-vehicle sales.
“Over time, we believe that strength in the manufacturing sector and strong retail sales will continue to lead to more job creation,” Don Johnson, vice president of U.S. sales at GM, said on a May 1 conference call with analysts. “That’s going to help more consumers put the recession behind them, gaining even more confidence and drive vehicle sales higher.”
The improvement in the U.S. contrasts with 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, data showed this week.
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.”
At the same time, cost-cutting is prompting reductions at some companies. H&R Block Inc. (HRB), the biggest U.S. tax preparer, plans to reduce 350 jobs and close about 200 company-owned offices. AMR Corp.’s American Airlines this month said it will eliminate 1,200 airport agent, baggage and cargo jobs as part of a bankruptcy restructuring plan to trim annual labor spending.
“Labor market conditions have improved in recent months; 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.”
The central bankers last month repeated their plan to hold borrowing costs low through late 2014 to spur growth.
Fed officials also cut forecasts for the jobless rate, to an average 7.8 percent to 8 percent in the fourth quarter from a January projection of 8.2 percent to 8.5 percent, according to central tendency estimates released April 25.
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