362,000 bid adieu to US workforce in April

Washington/London - Global markets hit; clouds loom over rate hike

The US economy added the fewest number of jobs in seven months in April and Americans dropped out of the labour force in droves, signs of weakness that cast doubts on whether the Federal Reserve will raise interest rates before the end of the year.
Nonfarm payrolls increased by 160,000 jobs last month as construction employment barely rose and the retail sector shed jobs, the Labour Department said on Friday. That was the smallest gain since September and below the first-quarter average job growth of 200,000.
Adding to the report's weak tone, employers added 19,000 fewer jobs in February and March than previously reported.
While the unemployment rate held at five per cent, that was because people dropped out of the labour force.
"For those who had thought a June rate hike was in play, this was a nail in the coffin. This raises questions about a September rate hike. I would like to think the economy is in a better place at the end of the year," said Phil Orlando, chief equity market strategist at Federated Investors in New York. The stepdown in job gains could temper expectations of a strong rebound in economic activity in the second quarter after growth nearly stalled in the first three months of the year.
Economists polled by Reuters had forecast payrolls rising 202,000 last month and the jobless rate unchanged at five per cent. Average hourly earnings were the only bright spot in the employment report, rising eight cents or 0.3 per cent last month.
That took the year-on-year increase to 2.5 per cent from 2.3 per cent in March, still below the three per cent advance that economists say is needed for inflation to rise to the Fed's two per cent target.
The labour force participation rate, or the share of working-age Americans who are employed or at least looking for a job, fell 0.2 percentage point to 62.8 per cent. It had increased 0.6 percentage point since dipping to 62.4 per cent in September.
The labour force fell by 362,000 as people dropped out in April. The employment-to-population ratio fell to 59.7 per cent from a seven-year high of 59.9 per cent.
No surprise: Global stocks hit
The sharp slowdown in hiring in the US sent stocks slumping as it raised concerns for the economic outlook and the perspectives for interest rates in the world's top economy.
Wall Steet opened on the downside following the data, with the Dow sliding 0.4 per cent.
European stocks, which had been trading lower ahead of the release of the nonfarm payroll data from the US Labour Department, dipped further before recovering partially.
London's benchmark FTSE 100 index was down 0.6 per cent in afternoon trading, while Frankfurt's DAX 30 index shed 0.3 per cent and the Paris CAC 40 lost 0.7 per cent in value.
A broad measure of unemployment that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment slipped one-tenth of a percentage point to 9.7 per cent last month.
The vast private services sector dominated employment gains in April, adding 174,000 jobs. Retail payrolls fell 3,100 after hefty gains in the first quarter, despite sluggish sales.
While information employment was unchanged last month, a Labour Department official said there was no sign that a strike by about 40,000 Verizon workers had impacted the data.
Manufacturing added 4,000 jobs last month after shedding 29,000 in March, the biggest loss for the sector since December 2009.
There were further job losses in mining as the energy sector adjusts to weak profits from a recent prolonged plunge in oil prices. Mining payrolls fell 8,000 last month. Mining employment has decreased by 191,000 jobs since peaking in September 2014, with 75 per cent of the losses in support activities.
Gains in construction employment slowed sharply, with the sector adding 1,000 jobs in April, after home building showed some signs of fatigue last month.