Economy adds 115,000 jobs in April; unemployment rate drops to 8.1 percent

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The Washington Post
By: Peter Whoriskey
May 4, 2012

Economy adds 115,000 jobs in April; unemployment rate drops to 8.1 percent

The unemployment rate dropped a notch to 8.1 percent in April, the Labor Department reported on Friday, but the pace of job growth has fallen off, amid other signs that the economic recovery may be losing momentum.

The economy added 115,000 payroll jobs last month, a meager showing compared with earlier this year when the jobs tally was rising at twice that rate and sowing optimism about the nation's economic prospects.

Some of the most quoted figures from the jobs report suggested good news. The unemployment rate dropped to 8.1 percent in April from 8.2 percent the month before, and the number of unemployed people declined to 12.5 million from 12.7 million.

But at least part of the reason for the decline in the ranks of unemployed is that many people decided to stop looking for a job. People who have stopped looking for work are no longer counted as unemployed.

The labor force, defined as the number of people working or seeking work, declined by 342,000 in April, Labor Department said.

"The decline in the unemployment rate is principally because a lot of people gave up looking for a job in April," said Paul Ashworth, chief U.S. economist for Capital Economics. "The economy has created so few jobs that people are disillusioned with trying to find a job and they've just given up."

The number of long-term unemployed, those who've been out of work for 27 weeks or more, was little changed at 5.1 million in April. That group makes up more than 40 percent of the jobless rolls.

The unemployment numbers, which may be the most closely watched economics barometer to come to bear in the presidential election, were seized upon by presumptive Republican presidential nominee Mitt Romney, who called Friday's report "terrible and very disappointing."

Romney suggested that job growth in a recovery should be closer to 500,000 jobs a month.

"This is way, way, way off from what should happen in a normal recovery," Romney said on Fox News. "It's a terrible and very disappointing report this morning.... We seem to be slowing down, not speeding up. This is not progress."

Yet an economy that is consistently adding 500,000 jobs a month has rarely been achieved in U.S. history, according to Labor Department figures. Over the last 20 years, there have been only two months - once in 1997 and 2010 - when the economy added nonfarm payroll jobs at that rate.

Over the last 20 years, the average annual monthly growth in those payroll jobs has been about 200,000.

"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," Alan B. Krueger, Chairman of the Council of Economic Advisers, said in a statement.

Stock prices dropped with the news of the jobs report. The Dow Jones industrial average was down 56.91 points, or 0.43 percent.

While the month of April falls well short of the trend that economists would like to see, Krueger and other analysts suggested that taking a broader view, the recovery seems healthy.

Over the last four months, the number of nonfarm payroll jobs has climbed 200,000 a month on average.

Economists attributed at least part of the recent fall-off in April to the good weather in January and February: Employers hired people then, boosting the numbers for January and February but depleting them in March and April, which have show relatively weak reports.

The 200,000 average monthly job gains "is actually not a bad jobs number," Ashworth said. "There's no reason to think the economy just fell of the rails."

In April, employment rose in professional and business services, retail trade, and health care. Transportation and warehousing lost jobs over the month.

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This page contains a single entry by CFED published on May 4, 2012 4:49 PM.

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