Job growth slows down again
Second wobbly month causes concern about recovery
WASHINGTON – One month of slower job growth might have been a blip. Two suggest a worrisome trend: The economy may be faltering again.
The United States generated just 115,000 jobs last month, well below expectations and the fewest since October. The unemployment rate fell to 8.1 percent, but for the wrong reason: workers abandoned the labor force.
From December through February, employers added 252,000 jobs a month on average. But the figure dipped in March and dropped further in April, raising doubts about an economic recovery that can’t seem to reach escape velocity.
The report Friday by the Labor Department indicated “an economy that is losing momentum – especially on the jobs front,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets.
It also dealt a blow to President Barack Obama’s re-election prospects. His presumed Republican opponent, Mitt Romney, called the report “very disappointing.”
Romney said the country should be adding 500,000 jobs a month and said any unemployment rate above 4 percent is “not cause for celebration.” The rate has not been that low since the last days of the Clinton administration.
“We seem to be slowing down, not speeding up,” Romney said on Fox News Channel. “This is not progress.”
Obama, at a Virginia high school to promote a freeze on interest rates for student loans, focused on the six-month total of more than 1 million jobs created. But he said: “We’ve got to do more.”
The 8.1 percent unemployment rate is the lowest since January 2009, the month Obama was sworn in.
Still, the weak job growth caused stocks to fall sharply on Wall Street. The Standard & Poor’s 500 index lost 1.6 percent and closed its worst week of the year.
Some of the slower job growth may be because an unusually warm winter allowed construction firms and other companies to add workers ahead of schedule in January and February, effectively stealing jobs from the spring.
The weaker job growth in March and April “looks like some weather payback,” said Paul Ashworth, chief U.S. economist at Capital Economics.
The balmy weather probably exaggerated job growth in the winter and makes it look small now, Ashworth said. He expects job creation to settle into a lackluster range between 175,000 and 200,000.
The economy may not be growing fast enough to produce anything stronger. Economists surveyed by the Associated Press expect the economy to grow 2.5 percent this year. That is consistent with monthly job growth of only about 135,000, according to calculations by Brad DeLong, an economist at the University of California, Berkeley.
That is barely enough to keep up with population growth and not nearly enough to recover the jobs lost in the Great Recession quickly. At this year’s pace, it will take until May 2014 to restore employment to its 2008 peak of 138 million.
The United States has only recovered 3.8 million, or 43 percent, of the 8.8 million jobs lost between the peak, in February 2008, and January 2010.
April’s hiring slump was broad. Only two of 10 large categories tracked by the government, retailers and professional and business services, hired more workers in April than they did in March.
The categories of manufacturing and education and health services added the fewest jobs in five months. Hotels, restaurants and entertainment companies added the fewest in eight months.
Friday’s report noted that the average hourly wage went up one penny in April. Over the past year, average pay has increased 1.8 percent, almost a full percentage point shy of the inflation rate, which means the average American isn’t keeping up with price increases.
Even April’s bright spot, the lower unemployment rate, fades on closer inspection.
The government only counts people as unemployed if they’re looking for work. And 340,000 Americans stopped looking and dropped out of the labor force in April, which is why the unemployment rate fell slightly. The dropouts mean just 63.6 percent of working-age Americans were working or looking for work, the lowest since 1981.
It has been almost three years since the Great Recession ended in June 2009. Economists say countries usually flounder for several years after a financial crisis like the one that hit the United States in 2008.
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