(MENAFN - Arab Times) US employers pulled back on hiring in April for the second straight month, evidence of an economy still growing only sluggishly, posing a threat to President Barack Obama's hopes of winning re-election.
While the unemployment rate dipped - only because more Americans gave up looking for work - Obama is likely to face voters in November with the highest unemployment rate of any US president since World War II.
The Labor Department said Friday that the economy added just 115,000 jobs in April. That's below March's upwardly revised 154,000 jobs and far fewer than the pace earlier this year.
The unemployment rate dropped to 8.1 percent last month from 8.2 percent in March. It has fallen a full percentage point since August to a three-year low. But last month's decline was not due to job growth. The government only counts people as unemployed if they are actively looking for work.
For the past two months, more than 500,000 Americans have stopped looking for jobs and are no longer counted as unemployed.
In April, the percentage of adults working or looking for work fell to the lowest level in more than 30 years. Many have become discouraged about their prospects. More than 5 million Americans have been unemployed for six months or longer, an astonishingly high number almost three years into a recovery. Republican Mitt Romney, Obama's likely opponent in November, seized on the modest job growth.
"This is way off from what should be happening in a normal recovery," Romney said on Fox & Friends. "You have more people dropping out of the work force than you have getting jobs."
"This is not progress," Romney said.
Stock futures dipped after the report was released.
Employers added an average of 252,000 jobs per month from December through February, a burst of hiring that raised hopes the economy would accelerate. But job gains have averaged only 135,000 in the two months since then. That's below last year's pace of 164,000 per month.
Some economists attribute the weak gains partly to mild winter, which led some companies to accelerate hiring in January and February. That may have weakened hiring in March and April.
"Over the next couple of months we would expect the monthly gains to settle back into a 150,000 to 200,000 range," Paul Ashworth, an economist at Capital Economics, wrote in a note to clients.
But others are concerned that this reflects a genuine slowdown.
"One month can be weather related, two months of weaker than expected job growth is dangerously close to a trend," Dan Greenhaus, an analyst at BTIG, an institutional brokerage firm.
The slowdown could heighten fears that high gas prices and sluggish income growth are weighing on the broader economy.
Pace
Economists noted that the job gains are consistent with the 2.2 percent annual growth in the first three months of the year. Faster growth will be needed to accelerate hiring.
The economy must create at least 125,000 jobs a month just to keep pace with population growth. It generally takes twice that number on a consistent basis to rapidly lower the unemployment rate.
Average hourly wages rose a penny in April, to 23.38. They have increased 1.8 percent over the past year, trailing the rate of inflation.
Manufacturers, retailers, and hotels and restaurants all added workers. So did professional services such as engineering and information technology. Shipping and warehousing firms, construction companies, and governments cut jobs.
Hiring in February and March was revised up to show additional job gains of 53,000.
There have been other signs that hiring will improve.
The number of people seeking unemployment benefits fell last week by the most in a year, the government said Thursday. That drop wasn't reflected in the April employment report, which was compiled from a survey taken earlier in the month. But it could bode well for hiring in May.
And earlier this week, the Institute for Supply Management, a private trade group, said factory activity grew at the fastest pace in 10 months and a gauge of manufacturing employment showed that hiring jumped.
Still, service companies expanded in April at the slowest pace in four months, according to a separate ISM survey. And the group said hiring at those companies, which employ roughly 90 percent of the work force, slowed.
The economy expanded at a 2.2 percent annual rate in the January-March quarter, down from 3 percent growth in the fourth quarter. Economists polled by The Associated Press forecast the economy will grow 2.5 percent this year. In a healthy economy, that would be considered average. But faster growth is needed to spur greater job creation.
Half of all voters say the economy is the single biggest issue in this November's election.
Since Obama took office in January 2009, the unemployment rate has arched from 7.8 percent at inauguration to 10 percent as the impact of the financial crisis spread, and back down to 8.1 percent today.
Obama's fate could turn on whether he can convince voters that his policies avoided another Great Depression and that his rival would return to policies that failed in the past.
Alan Kreuger, Obama chief White House economic advisor, said the figures were positive, but showed there was more work ahead.
"Today's employment report provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression, but much more remains to be done to repair the damage caused by the financial crisis and the deep recession."
His Republican foes were quick to pounce on the data as evidence of economic mismanagement.
"President Obama has broken countless promises during his time in office - but none more important than his promise to help create jobs and get our economy moving again," said Andrea Saul, a spokesperson for Republican candidate Mitt Romney.
