Weak Employment Data Put Pressure on Obama’s Pitch of Economic Rebound
By CONOR DOUGHERTY, BEN CASSELMAN, and LAURA MECKLER
U.S. job growth slowed in April, spooking markets and giving President Barack Obama a tougher sell as he tries to convince voters that the economy is on the mend.
The disappointing jobs report raised concerns that the economy, which appeared to be accelerating late last year and early this year, is bogging down again. The labor force shrank again last month, indicating more workers are throwing in the towel.
Employers added a seasonally adjusted 115,000 jobs in April, the smallest increase since October, the Labor Department said. Private employers added 130,000 jobs while governments cut their payrolls by 15,000. The unemployment rate, derived from a separate survey, ticked down to 8.1%, the lowest rate since January 2009. But the drop wasn’t good news: The rate fell mostly because 342,000 people left the labor force.
Friday’s job report is the first since Mitt Romney effectively sewed up the GOP nomination. He pointed to the new numbers Friday to hit Mr. Obama on the economy. “This is a time when America wants to have someone who knows what it takes to create jobs and get people working again,” he said at a campaign stop outside Pittsburgh.
Mr. Obama argues that the economy is recovering slowly from a deep recession, and Congress should do more to spur growth. On Friday, he noted that the report continued more than two years’ worth of job growth, while acknowledging the lingering weakness.
“After the worst economic crisis since the Great Depression, our businesses have now created more than 4.2 million new jobs over the last 25 months—more than one million jobs in the last six months alone,” he told students at a suburban Virginia high school. “But there’s still a lot of folks out of work, which means that we’ve got to do more.”
He said he would urge Congress to “take some actions on common-sense ideas that can accelerate even more job growth.” He didn’t say what he would propose. Most of the ideas he has put forth in the past have gone nowhere, including more infrastructure spending and aid to states to keep public employees such as teachers employed.
It may not matter. Economists say it is probably too late for any policy out of Washington to affect the economy before November’s election. But Obama advisers believe that the president will benefit politically if voters see he is fighting for these ideas. The stock market dropped sharply Friday. The Dow Jones Industrial Average fell 168.32 to 13038.27, its biggest drop in almost a month. The NASDAQ Composite Index fell 2.2%, capping its worst week since late November.
Adding to investor worries are elections in Greece and France set for the weekend. Investors are worried that leaders of both countries could be ousted, leading to more upheaval in the region.
The latest jobs numbers leave open the possibility that the Federal Reserve might do more to try and boost economic growth, although financial markets don’t expect any immediate move.
A $400 billion Fed bond-buying program, meant to reduce long-term interest rates, ends next month. The latest report isn’t evidence of a stall, but the slowing pace of payroll gains is sure to worry some Fed officials. It likely ensures the Fed won’t veer from its plan to keep short-term rates low until late 2014.
“We’re making progress on the employment part of our mandate, but we have a long way to go,” said John Williams, president of the Fed’s San Francisco branch, in a speech to the California Bankers Association on Friday. “Substantial risks remain that could cause the economy to perform worse than I expect. Under these circumstances, it’s crucial that we continue our highly accommodative monetary policy.”
Some of the slowdown in April may have been the result of an unusually warm winter, which caused companies to hire workers earlier in the year than they otherwise would have. The Labor Department revised upward its estimates for job growth in February and March by a combined 53,000 jobs. The U.S. has added an average of just over 200,000 jobs a month in the past four months, a marked improvement from last summer, when job growth nearly stalled out.
Job Candidates | Two Views from the Trail
- After the worst economic crisis since the Great Depression, our businesses have now created more than 4.2 million new jobs over the last 25 months — more than one million jobs in the last six months alone.
— President Barack Obama
- This is a time when America wants to have someone who knows what it takes to create jobs and get people working again.
— GOP Hopeful Mitt Romney
Nonetheless, Friday’s report was weak across multiple categories. Construction employment fell slightly. Manufacturing employment, an area of strength in recent months, grew by a disappointing 16,000 jobs. Even as employers added jobs last month, full-time employment actually fell by 812,000.
Other signs suggest that the economic recovery is faltering. Last week, the government said overall economic growth slowed in the first three months of the year amid government budget cuts and weaker business investment.
Consumer spending has emerged as an economic bright spot in recent weeks, but Friday’s report showed that hourly earnings barely picked up in April, which could give consumers little room to boost spending.
Other signs have been more encouraging. A measure of manufacturing activity earlier this week showed the fastest pace of growth in nearly a year, and layoffs slowed last week after picking up earlier this spring.
“The momentum in the labor market is slowing, but it’s not falling off a cliff,” said Neil Dutta, an economist with Bank of America Merrill Lynch. “The winter months were more the exception and not the rule.”
Craig Bouchard, chief executive of industrial company Shale-Inland, said going into this year he expected strong economic growth.
His company—which distributes stainless steel and other metals and manufactures metal parts—saw rising demand for its products due to increased consumer demand for dishwashers, washing machines and other major appliances. But as the year progressed, he said, demand began to dry up.
Mr. Bouchard said that uneven demand and broader economic uncertainty have made him reluctant to step up hiring at the Schiller Park, Ill.-based firm, which employs about 1,400 people at 47 plants across the U.S.
“If I need more help, I’ll go get a temp where I don’t bear that permanent responsibility,” Mr. Bouchard said.