Job growth slows again

By CHRISTOPHER S. RUGABER

Associated Press

WASHINGTON — One month of slower job growth might have been a blip. Two suggest a worrisome trend: The economy may be faltering again.

The United States generated just 115,000 jobs last month, well below expectations and the fewest since October. The unemployment rate fell to 8.1 percent, but for the wrong reason — workers abandoned the labor force.

From December through February, employers added 252,000 jobs a month on average. But the figure dipped in March and dropped further in April, raising doubts about an economic recovery that can’t seem to reach escape velocity.

The report Friday by the Labor Department indicated “an economy that is losing momentum — especially on the jobs front,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets.

The 8.1 percent unemployment rate is the lowest since January 2009, the month Obama was sworn in.

Some of the slower job growth may be because an unusually warm winter allowed construction firms and other companies to add workers ahead of schedule in January and February, effectively stealing jobs from the spring.

The balmy weather probably exaggerated job growth in the winter and makes it look small now, Ashworth said. He expects job creation to settle into a lackluster range between 175,000 and 200,000.

The economy may not be growing fast enough to produce anything stronger. Economists surveyed by The Associated Press expect the economy to grow 2.5 percent this year.

That is consistent with monthly job growth of only about 135,000, according to calculations by Brad DeLong, an economist at the University of California, Berkeley.

That is barely enough to keep up with population growth not nearly enough to recover the jobs lost in the Great Recession quickly. At this year’s pace, it will take until May 2014 to restore employment to its 2008 peak of 138 million.

The United States has only recovered 3.8 million, or 43 percent, of the 8.8 million jobs lost between the peak, in February 2008, and January 2010.

David Boyce, 30, is one of those still looking for work. He lost his sales job two years ago and ran out of unemployment benefits in September. He and his wife, who is working reduced hours as a nanny, are struggling to get by.

“We lived off savings for a while,” he said. “And now we’re living off ramen noodles basically.”

April’s hiring slump was broad. Only two of 10 large categories tracked by the government, retailers and professional and business services, hired more workers in April than they did in March.

The categories of manufacturing and education and health services added the fewest jobs in five months. Hotels, restaurants and entertainment companies added the fewest in eight months.

Friday’s report noted that that the average hourly wage went up one penny in April. Over the past year, average pay has increased 1.8 percent, almost a full percentage point shy of the inflation rate, which means the average American isn’t keeping up with price increases.

Even April’s bright spot, the lower unemployment rate, fades on closer inspection.

The government only counts people as unemployed if they’re looking for work. And 340,000 Americans stopped looking and dropped out of the labor force in April, which is why the unemployment rate fell slightly. The dropouts mean just 63.6 percent of working-age Americans were working or looking for work, the lowest since 1981.

It has been almost three years since the Great Recession ended in June 2009. Economists say countries usually flounder for several years after a financial crisis like the one that hit the United States in 2008.

Damaged banks are reluctant to lend. Borrowers who took on too much debt in the good times change their ways, cut their spending and try to repair their finances. The economy grows slowly.

And after this financial crisis, the economy is trying to gather speed without two of the engines that usually help power economic recoveries: housing and government spending.

A housing collapse caused the crisis, and home construction isn’t doing much to lead the way out. Housing hasn’t contributed to economic growth since 2005, though a recent burst of apartment construction might change that this year.

Government hiring also normally boosts employment after a recession. Not this time. Cities, towns and counties, especially, have been cutting employment. Private employers have added jobs every month since February 2010, noted Gary Burtless, senior fellow in economic studies at the Brookings Institution. Over that same period, government payrolls have dropped by 500,000.

Local governments are beginning to recover some of the tax revenue lost in the recession and its aftermath. But government hiring hasn’t started yet: 15,000 government workers, most of them in local schools, lost their jobs in April.

The recovery has one thing going for it: Even meager gains in jobs will feed on themselves and create growth that eventually becomes self-sustaining. The hiring leads to spending, which stimulates demand and leads to more hiring, which leads to more spending. The country has created 1.5 million jobs in eight months.

The economists AP surveyed said they believe the economy has entered such a “virtuous cycle.” But they said they don’t expect unemployment to reach a healthy level — below 6 percent — until 2015 or later.

Until then, many companies are likely to behave like the North American division of Philips, the healthcare and consumer products company. It is hiring, but more slowly than in years past.

The company is trying to fill 400 jobs, including 127 in Cleveland, where it has a plant that makes medical imaging equipment. Things are improving, said Cynthia Burkhardt, the company’s vice president of talent acquisition. But “I wouldn’t say that we’re full steam ahead right now. Everyone’s cautious about the economy.”