Hiring slows, spells trouble for economy, Obama

Fri May 4, 2012 3:07pm EDT
 
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By Jason Lange

WASHINGTON (Reuters) - Employers cut back on hiring in April and more people stopped looking for work, troubling signs for President Barack Obama whose re-election prospects could hinge on his handling of the economy.

Employers added 115,000 workers to payrolls last month, the Labor Department said on Friday. It was the third straight month in which hiring had slowed, intensifying fears the U.S. recovery is losing momentum.

Even a slight drop in the unemployment rate to 8.1 percent had a dark tone because the fall was due entirely to people dropping out of the workforce.

"The bottom line is you don't have evidence that this economy has reached escape velocity," said Robert Tipp, an investment strategist at Prudential Fixed Income.

Analysts had expected 170,000 new jobs in April, and the shortfall could open the door a bit wider for the Federal Reserve to step up efforts to help the economy.

Major U.S. stock indexes tumbled more than 1 percent and yields on U.S. government bonds declined.

Still, the report was not all negative. The government revised upward earlier estimates for payroll growth in February and March by a combined 53,000 jobs.

POLITICAL ECONOMY   Continued...

 
A job seeker yawns as he waits in front of the training offices of Local Union 46, a union representing metallic lathers and reinforcing ironworkers, in the Queens borough of New York in this April 30, 2012 file photograph. Employers added 115,000 workers to their payrolls last month, the Labor Department said on May 4, 2012. REUTERS/Keith Bedford/Files