WASHINGTON (Reuters) — Employers in the United States 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 President Barack Obama's re-election chances.
Employers added just 115,000 workers to their payrolls last month, the U.S. 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 signalled a turning point for the recovery.
"It shows sluggish growth," said John Doyle, currency strategist at Tempus Consulting in Washington.
The unemployment rate ticked one-tenth of a point lower to 8.1 per cent, 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 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.
His Republican challenger, Mitt Romney, repeatedly has accused Obama of doing too little to foster job growth.
The unemployment rate, which soared to as high as 10 per cent during Obama's first year in the office, held near nine per cent for most of last year before falling sharply over the winter.
Still, it remains about two percentage points higher than its average over the last 50 years, and the U.S. Federal Reserve thinks the labour 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 labour 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 braked 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.
Wall Street analysts see economic growth holding at a lackluster 2.2 per cent annual rate in the second quarter, matching its pace in the first three months of the year.
The length of the average work week held steady at 34.5 hours in April.
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