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Unemployment falls to 8.1 percent in April, but Dow drops
The nation's unemployment rate continued its rapid decline last month, falling to 8.1 percent as another 115,000 jobs were added throughout the economy, the Labor Department reported Friday morning.
The jobless rate is down substantially from 9 percent a year ago, dropping most dramatically during the winter when the pace of job creation picked up to over 200,000 a month. But the news met with mixed reaction from investors as the job-creation figure was well below market expectations, while Republican critics Friday pointed to the large number of Americans who have dropped out of the labor force altogether.
Chris Williamson, chief economist at Markit, predicted that world financial markets will be disappointed with the 115,000 job gain last month, as many investors were expecting a heftier increase of about 170,000. The Dow Jones Industrial Average dropped by about 90 points at the open of trading Friday morning.
While revisions by the department show that businesses created 54,000 more jobs in previous months, the total created last month was the weakest since the swift improvement in the job market began last August, Mr. Williamson said.
"It's a further big disappointment for the U.S. economy" after a string of recent reports showing a marked slowdown in the spring, he said. Still, with the jobless rate overall steadily falling, the report is sending mixed signals about the strength of the economy, he said.
But while job growth has slowed recently, at over 100,000 a month it still is fast enough to keep drawing down the unemployment rate — perhaps to under 8 percent by the end of the year, economists say.
John Silvia, chief economist at Wells Fargo Securities, said the economy this spring appears to be chugging along in a modest but durable expansion after a brief hot spell in the winter.
"The pattern appears to be an economy settling in to 2-2.5 percent growth rate — neither accelerating nor decelerating," he said.
Job growth was widespread last month in the private sector, which is entering its fourth year of expansion this summer. Retailers, restaurants, manufacturers, mining firms, white-collar businesses and medical offices all added workers.
The only sector that continues to shed jobs consistently is government, where budget cuts are forcing layoffs and other austerity measures. The retrenchment in the government sector is a drag on growth, and economists expect that trend to continue — most likely worsening at the federal level in the next few years.
The fall in the overall unemployment rate is good news for President Obama, improving his prospects for re-election in November. Since voters are overwhelmingly focused on jobs, the slowdown in the pace of overall economic growth is likely to get less attention than the continued improvement in the job market, economists say.
At 8.1 percent, unemployment has fallen to the same level where it was when Mr. Obama took office in January 2009.
"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," White House Council of Economic Adviser Chairman Alan B. Krueger said in a statement. "It is critical that we continue the economic policies that are helping us dig our way out of the deep hole that was caused by the severe recession that began at the end of 2007.
But Douglas Holtz-Eakin, Republican economic adviser, said the decline in unemployment last month was deceptive because it was caused by people dropping out of the labor force after getting discouraged when they couldn't find work, rather than more people finding jobs.
He called the jobs report "dreadful" because of, among other things, a flattening trend in wage gains.
"There's not enough silver there to constitute a thread much less a lining," he said. "Not many jobs, not much income, and not enough hope for over 300,000 workers who gave up looking."
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