Job Growth Just 115,000 in April, Rate Drops to 8.1%
April's job report lived up to muted expectations, with the economy creating a meager 115,000 jobs during the month as the unemployment rate fell to 8.1 percent.
Job creationin the private sector was slightly better at 130,000, but overall the report painted a picture of a jobs market that had gotten a boost from unseasonably warm winter weather but now has cooled.
The service sector again accounted for most of the job creation, growing 101,000 while manufacturing added just 16,000, according to the Bureau of Labor Statistics. Governments cut a net 15,000 jobs for the month. The average work week was unchanged at 34.5 hours.
Though the headline number indicated job creation, the total employment level for the month actually fell 169,000. The disparity likely emanates from a drop in the labor force participation rate — or the level of Americans actively looking for jobs or otherwise employed — from 63.8 percent to 63.6 percent, its lowest level since December 1981.
The amount of discouraged workers swelled from 865,000 to 968,000, an increase of 12 percent. Those working part-time for economic reasons surged 181,000 to more than 7.8 million.
"In the weakest recovery since the Great Depression, more than four-fifths of the reduction in unemployment has been accomplished by a dropping adult labor force participation rate — essentially persuading adults they don't need a job, or the job they could find is not worth having," said University of Maryland economist Peter Morici.
Wall Street economists had been expecting the Bureau of Labor Statistics report to show 170,000 new jobs created and the unemployment rate holding steady at 8.2 percent.
The unemployment rate, which estimates the total percentage of jobless Americans but does not count those not actively looking for work, was last this low in January 2009, when President Obama took office. Total job creation, though, remains narrowly negative for the president and likely will be a contentious issue as Obama seeks a second term.
The miss in the nonfarm payrolls report led to a negative reaction on Wall Street, with the stock market trading sharply lower and interest rates on government debt falling. The 30-year bond gained more than 3 points in price to yield 3.09 percent. Traders frequently treat the jobs report as a sell-the-news event, with stocks falling 10 of the last 12 days when the report has come out.
An alternative measure of unemployment which counts those who have stopped looking for work held steady at 14.5 percent.
The BLS also indicated an upward revision to its March numbers, from 120,000 to 154,000.
Long-term unemployment remains a problem, though it eased somewhat in April. The total amount of those out of a job for more than 27 weeks dipped from 5.3 million to 5.1 million, while the average duration of unemployment fell from 39.4 weeks to 39.1 weeks.
"This remains a weak economy, and the job counts in March and April — which have come in at considerably below 200,000 per month — may perhaps continue right through the summer," said Kathy Bostjancic, director of macroeconomic analysis at The Conference Board.
Temp jobs grew by 21,000 for April while retail added 29,000. Hospitality and leisure employment rose 20,000 — and is up 576,000 since February 2010 — while health care added 19,000.
Weather has been a significant factor in all of the economic reports, with speculation that the warm temperatures and low levels of snowfall, particularly in the Northeast, helped goose some of the wintertime trends.
The payrolls report showed an average gain of 252,000 from December through February, but the March and April reports indicate that trend has cooled.
"Some of the gains were probably pulled forward due to some of the weather issues with the mild winter," said Brad Sorensen, director of market and sector research at Charles Schwab. 'We think that we'll start to get cleaner numbers through through May and June and on from there."
Alan Krueger, chairman of the president's Council of Economic Advisors, said the job numbers show "a picture of the economy healing."
"The president’s trying to do the things to hasten job growth," he told CNBC's "Squawk on the Street." "One month does not a trend make."
There have been 26 months of job growth, with more than 800,000 jobs added this year alone, he said.
But he acknowledged that "given the problems the U.S. economy has had over the past decade, problems that had been growing for some time, we need faster job growth. We have a very large jobs deficit. We’re making progress and we need to do things to continue to build on that progress."
The report comes as the FederalReserve ponders its next move. The central bank's Operation Twist program ends in June, so investors are awaiting whether the Fed enacts another round of easing or allows for a normalization of monetary policy and interest rates.
"The bar is probably quite a bit higher now for more monetary action by the Fed," Sorensen said. "You have to ask yourself what they are going to add at this point. What real impact on the market will monetary stimulus have? There's plenty of cash out there, so pumping more cash into the system is not really going to move the needle a whole lot."
Other economic reports have painted a mixed picture — global manufacturing indexes, particularly those out of Europe, are showing a progressive decline while the U.S. remains in modest growth mode.
However, the most recent Institute of Supply Manufacturers report showed weakness in the services sector, which has driven almost all of the employment gains over the past year.
"You need to look at (the jobs report) over six months," said John Canally, economist at LPL Financial in Boston. "It's been 200,000, so maybe the economy will take that. The question is where does that put the Fed, and I think it's in no-man's land."
The market had been expecting a weak jobs number after successive weeks of elevated new jobless claims, while a report earlier this week from ADP showed that private sector hiring continued but at a weakened pace. The ADP number, dismissed by some for inaccuracies, just saw private-sector hiring of 119,000 for the month, within range of the final 130,000 number.
Critics of the government's numbers had pointed to inconsistencies in the reports, particularly compared to Gallup, which earlier in the year had been showing unemployment higher than the BLS numbers. However, the two reports have more closely converged in recent months.
Gallup on Thursday said its pollingshowed the unemployment rate without seasonal adjustment fell from 8.4 percent to 8.3 percent in April, while the adjusted rate actually increased to 8.6 percent from 8.1 percent.