U.S. employers added fewer workers than predicted in April, but the jobless rate unexpectedly fell as people left the labor force, adding to concern the economic expansion is cooling.
Payrolls climbed 115,000, the smallest gain in six months, after a revised 154,000 gain in March that was larger than initially estimated, Labor Department figures showed Friday. The median estimate of 85 economists surveyed by Bloomberg News called for a 160,000 advance.
Despite that, the unemployment rate fell to a three-year low of 8.1 percent while earnings stagnated.
Stocks and bond yields fell on concern a slowdown in hiring may restrain the wage growth needed to fuel consumer spending, which accounts for about 70 percent of the economy. The data support the views of Federal Reserve policy makers led by Chairman Ben S. Bernanke, who say low interest rates are needed at least through late 2014 to boost the labor market.
“We’re still very much on the recovery path, but we’ve got a huge amount of ground to make up in the labor market,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Fla., who accurately forecast the unemployment rate. Today’s report “is not really enough to push the Fed one way or the other.”
The Standard & Poor’s 500 Index and the NASDAQ composite index both dropped more than 1 percent in early trading Friday. The Dow Jones industrial average also was down almost 1 percent.
Transportation and warehousing, government agencies and construction all cut jobs in April. Bloomberg survey estimates ranged from increases of 89,000 to 210,000 after a previously reported 120,000 rise in March. Revisions added a total of 53,000 jobs to payrolls in February and March.
The jobs data come six months before Americans head to the polls to either re-elect President Barack Obama or choose Republican Mitt Romney, who has said White House policies have done little to help U.S. workers.
The unemployment rate was forecast to hold at 8.2 percent, according to the survey median. Estimates in the Bloomberg survey ranged from 8.1 percent to 8.3 percent. Unemployment has exceeded 8 percent since February 2009, the longest such stretch since monthly records began in 1948.
The participation rate, which indicates the share of working-age people in the labor force, fell to 63.6 percent, the lowest since December 1981, from 63.8 percent.
Private payrolls, which exclude government agencies, rose 130,000 after a revised gain of 166,000. They were projected to rise by 165,000, the survey showed.
Factory payrolls increased by 16,000, the smallest in five months and less than the survey forecast of a 20,000 increase.
Employment at service-providers increased 101,000 in April, the smallest gain since August. Construction companies cut 2,000 jobs and retailers added 29,300 employees.
The last two months may reflect a weather-related payback. Hiring probably eased following warmer-than-usual weather that pulled forward some workforce additions into the early months of the year.
“The weather was mild in January and February, and it’s very possible that hiring was pulled forward,” said Christophe Barraud, an economist and strategist at Market Securities Paris LLP, who correctly forecast the payrolls figure. “This report is not good, but we have to wait for the next one to see if the real trend is actually decelerating.”
Government payrolls decreased by 15,000. State and local governments employment dropped by 11,000.
Evan Christou, owner of Tops American Grill, Bakery & Bar in Schenectady, N.Y., said at this time he has no plans to add to his staff of 42 employees. His sales were up about 6 percent earlier this year before dropping off when gas prices went up. He said he would need to see a significant increase in sales for a sustained period before hiring more workers.
“We’re kind of consolidating and multi-tasking,” said Christou, 49. “In this market, it’s pretty much a wait-and-see attitude.”
Average hourly earnings were essentially unchanged, the weakest since August, at $23.38,the report showed. Compared with April of last year, earnings climbed 1.8 percent, matching January as the smallest in a year.
The average work week for all workers held at 34.5 hours.
The so-called underemployment rate, which includes part-time workers who’d prefer a full-time position and people who want work but have given up looking, held at 14.5 percent.
The report also showed a drop in long-term unemployed Americans. The number of people unemployed for 27 weeks or more decreased as a percentage of all jobless, to 41.3 percent.
The number of temporary workers increased 21,100. Payroll at temporary-help agencies often slow as companies seeing a steady increase in demand take on permanent staff.
Faster economic growth would help lay the groundwork for more hiring. The economy expanded at a 2.2-percent annual rate in the first quarter after a 3-percent pace the prior three months, the Commerce Department reported last week. Consumer spending grew 2.9 percent, the most in more than a year.