Recovery catches a chill

WASHINGTON - American employers added fewer workers than forecast in April, and the jobless rate unexpectedly fell as people left the labor force, adding to concern that the economic expansion is cooling.

Payrolls climbed 115,000, the smallest gain in six months, after a revised 154,000 gain in March that was larger than initially estimated, Labor Department figures showed Friday.

The median estimate of 85 economists surveyed by Bloomberg News had called for a 160,000 advance. The jobless rate fell to a three-year low of 8.1 percent, and earnings stagnated.

Stocks and bond yields fell on concern that slow hiring may limit wage growth needed to fuel consumer spending, which accounts for about 70 percent of the economy. The data support the views of Federal Reserve policymakers led by Chairman Ben Bernanke, who say low interest rates are needed at least through late 2014 to boost the labor market.

"We're still very much on the recovery path, but we've got a huge amount of ground to make up in the labor market," said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Fla., who accurately forecast the unemployment rate. Friday's report "is not really enough to push the Fed one way or the other."

Nevada, meanwhile, continues to lag the rest of the country. Unemployment in March stood at 12 percent statewide and at 12.1 percent in Las Vegas. Nevada's rate for April has not yet been released by the state Department of Employment, Training and Rehabilitation.

Brian Gordon, a principal with Las Vegas-based financial consultant Applied Analysis, said any improvement in job growth nationwide is good for a tourism-based economy such as Las Vegas,.

But similar to the national numbers, state and local unemployment rates have declined in recent months because people have dropped out of the labor pool and are no longer actively seeking work, not because of new job formation.

"That puts downward pressure on the unemployment figure," Gordon said.

Nevada's leisure and hospitality industry added 10,100 jobs between March 2011 and March 2012, Gordon said, an increase of 3.9 percent. However, growth in other industries, such as construction, remained sluggish.

Jobs issue could follow voters to polls

The national 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.

A falling unemployment rate would seem to be good news for Obama. Dating to 1956, no incumbent president has lost when unemployment fell in the two years leading to an election. On Election Day, unemployment probably will be lower than it was two years earlier: 9.8 percent in November 2010.

But for the past two months, the rate has fallen for the wrong reason: More than 500,000 Americans have stopped looking for jobs and are no longer counted as unemployed. Job growth averaged a healthy 252,000 from December through February. It slowed to an average of 135,000 in March and April.

The question is whether voters will focus more on the falling unemployment rate or the modest job growth.

Romney seized on the latter, noting the falling number of people seeking work.

"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.

Jobless rate continues unhappy streak

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, or 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.

Factory payrolls increased by 16,000, the smallest in five months and less than the survey forecast of a 20,000 increase.

Jobs at service providers increased 101,000 in April, the smallest gain since August. Construction companies cut 2,000 jobs. Retailers added 29,300.

Hiring in the past two months probably eased after unusually warm weather that pulled some workforce additions into the early months of the year.

"The weather was mild in January and February, and it's very possible that hiring was pulled forward," said Christophe Barraud, an economist and strategist at Market Securities Paris who correctly forecast the payroll figure.

"This report is not good, but we have to wait for the next one to see if the real trend is actually decelerating."

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 underemployment rate - including part-time workers who would 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, but still looking for a job, 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.

Written by Review-Journal reporter Howard Stutz with information from Bloomberg News and The Washington Post.