By Lucia Mutikani
WASHINGTON, May 3 (Reuters) - U.S. employment growth likely
picked up in April, but probably not by enough to counter other
signs that suggest the economy has lost a step in recent weeks.
Nonfarm payrolls are expected to have increased by 145,000
jobs, according to a Reuters survey of economists, after braking
to a nine-month low of 88,000 in March. Taken together, the job
creation pace over the past two months would still be far below
the average of 200,000 for the first two months of this year.
'That would be consistent with an economy that's losing
growth momentum but hasn't fallen out of bed,' said Millan
Mulraine, a senior economist at TD Securities in New York.
Although the economy grew at a 2.5 percent annual pace in
the first quarter, data on construction spending, retail sales
and trade suggested it ended the period with less speed.
Factory data for April imply the loss of momentum persisted
early in the second quarter, setting the stage for a replay for
a third straight year of what economists have called the spring
Economists say uncertainty over the full impact of higher
taxes and deep government spending cuts on already sluggish
demand was making businesses reluctant to hire. A 2 percent
payroll tax cut ended at the start of the year, and $85 billion
in federal budget cuts went into effect on March 1.
The forecast job gains should be just enough to hold the
unemployment rate at a four-year low of 7.6 percent, though the
rate could even fall as older Americans retire and younger
people give up the hunt for work in frustration.
The labor force participation rate - the share of
working-age Americans who either have a job or are looking for
one - hit a 34-year low in March.
'We need more than 3 percent growth on a sustained basis to
make real inroads in reducing not only the number of those
counted as unemployed, but the legions of those who are nowhere
to be found in the labor force data,' said Patrick O'Keefe, head
of Economic Research at CohnReznick in Roseland, New Jersey.
The Labor Department will release its April employment
report on Friday at 8:30 a.m. (1230 GMT).
HIGH BAR FOR FED
The continued sluggishness of job growth would likely
bolster the resolve of the Federal Reserve to push forward with
its efforts to spur a stronger recovery.
On Wednesday, the U.S. central bank said it would continue
to buy $85 billion in bonds each month and keep on buying until
the labor market outlook improved substantially. It even said it
would step up purchases should the need arise.
'They have sort of tied their hand here; they set a very
high bar for what constitutes a satisfactory improvement in the
job market,' said Robert DiClemente, chief economist at
Citigroup in New York. 'This number will be a reminder that we
are not there yet.'
Economists are divided on the impact government spending
cuts may have had on employment in April. Some see a minor hit,
arguing that the government has been reducing hours for workers
instead of resorting to outright lay-offs.
Others, however, say there have been job losses in
industries such as defense contracting. However, first-time
applications for state unemployment benefits have shown no sign
of a pick-up in lay-offs and rose in only one week in April.
'At the margin, the sequester is having an impact. You might
see it in the hours worked rather than payroll jobs,' said John
Canally, an economist for LPL Financial in Boston.
While reducing hours keeps more people on the payroll, it
does cut into economic growth.
The composition of job growth in April is expected to be
fairly encouraging, although little change is anticipated in
manufacturing employment, which fell in March for the first time
Construction employment is seen snapping back after being
slowed by unusually cold weather in March. That would mark an
11th straight month of gains, thanks to a recovering housing
Job gains in the private services sector are expected to
have picked up from March's nine-month low, although the retail
sector remains a wild card. Retail employment fell in March
after eight straight monthly increases.
Government payrolls are expected to have dropped by about
15,000 jobs in April after falling by 7,000 in March. Most of
the drag is expected to come from the U.S. Postal Service, which
economists think continued to pare its workforce even after
about 12,000 workers departed in March.
The report is expected to show average hourly earnings rose
by 0.2 percent after being flat in March.
The length of the average workweek is expected to have held
steady at a nine-month high of 34.6 hours, but government
furloughs could weigh.
(Reporting by Lucia Mutikani; Editing by Tim Ahmann and Dan
((Lucia.Mutikani@thomsonreuters.com)(1 202 898 8315)(Reuters
Keywords: USA ECONOMY/
(Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com))
Copyright Thomson Reuters 2013. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.