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Analysis: Weak Jobs Report Stokes Fears of Another Summer Fizzle

Friday, 04 May 2012 09:46 AM

The U.S. labor market shifted into lower gear in April in what could be a replay of 2011 when job gains accelerated early in the year only to fizzle out in the summer.

Employers added 115,000 jobs to their payrolls last month, the smallest amount since October and far fewer than economists' expectations for a count of 170,000.

Though data for February and March was revised to show 53,000 more jobs were created in those months than previously reported, details of the report were largely soft, suggesting some fundamental weakness in the labor market and keeping the door open for monetary stimulus from the Federal Reserve.

The unemployment rate fell to 8.1 percent, the lowest since January 2009, but only because 342,000 Americans gave up the search for work. The labor force participation rate, or the percentage of Americans who either have a job or are looking for one, dropped to 63.6 percent — the lowest since December 1981.

An unusually warm winter and difficulties adjusting the data for seasonal fluctuations arising from the magnitude of the 2007-2009 recession are making it difficult to make a proper assessment of the state of the economy. However, the data make it appear as if the recovery has taken a step back.

WHERE ARE THE JOBS

* All the job gains in April came from the private sector, where payrolls rose 130,000. The gains were concentrated mostly in the services industries, which added 116,000 jobs after adding 128,000 in March.

* Retail employment broke two straight months of job losses, rebounding by 29,300. Professional and business services payrolls added 62,000. Leisure and hospitality rose 12,000, slower than March's 52,000 gain.

* Temporary hiring accounted for 21,100 jobs, reversing March's 9,400 drop. Economists often look at temporary jobs as a leading indicator of future full-time hiring, although some say companies are relying on temporary staff to fill longer-term needs.

* Employment in the goods-producing sector rose by 14,000 jobs last month, with most of the increase in manufacturing, where payrolls rose 16,000 after rising 41,000 in March. Factory jobs have been boosted by automakers who are ramping up production to meet demand from households and to rebuild inventories.

Motor vehicle output grew at a 51 percent annualized rate in the first quarter, with the production of autos up almost 160 percent, the strongest growth since the early 1970s. Analysts say vehicle manufacturers will have to scale back on production to prevent an unwanted inventory pile up.

* Construction payrolls dipped 2,000 after falling 3,000 in March. Construction jobs got a boost in December and January from the mild weather. There were no gains in mining and logging employment for the second straight month.

* Government employment fell 15,000, with most of the drag coming from local governments, who laid off teachers.

* Hourly earnings rose just 1 cent, indicating that most of the jobs being created are low paying.

WHAT DID THE HOUSEHOLD SURVEY SAY

* The household survey from which the jobless rate is derived showed employment fell by 169,000, a second straight monthly decline.

* The drop in the labor force participation rate, which stood at 63.8 percent in March, suggested Americans are growing more pessimistic on job prospects. The decline in labor force participation has been one of the reasons behind the 1 percentage point drop in the unemployment rate since August.

* A broad measure of unemployment, which includes people who want to work but have stopped looking and those working only part time but who want more work, was unchanged at 14.5 percent .

* A total of 12.5 million Americans were unemployed in April and 41.3 percent of them had been out of work for six months and more.

© 2017 Thomson/Reuters. All rights reserved.

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