Slow US hiring raises fears

US employers cut back on hiring in April and more people gave up the hunt for work, dimming hopes the economy was turning a corner just as President Barack Obama prepared to launch his re-election campaign.

Employers added 115,000 workers last month after increasing payrolls 154,000 in March, the Labour Department said on Friday. Economists had expected to see the creation of 170,000 jobs.

The unemployment rate ticked a tenth of a point lower to 8.1 per cent, a three-year low, but only because people left the workforce.

It was the third straight month in which hiring slowed, intensifying fears that the US recovery is losing momentum and opening the door a bit wider for the Federal Reserve to ease monetary policy.

“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.

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

The report could rattle nerves at the White House. Weak US growth and high unemployment create a formidable headwind for Obama, who entered office during the darkest days of the 2007-09 recession.

His Republican challenger, Mitt Romney, repeatedly has accused Obama of doing too little to foster job growth.

House Republican Speaker John Boehner called the report “more evidence President Obama’s policies aren’t working for families and small businesses, and aren’t creating enough jobs to get our economy back on track.”

The White House tried to put the report in a positive light. “One month does not a trend make,” White House economic adviser Alan Krueger told CNBC. “I think it makes sense to average the last few months together and the economy continues to go in a positive direction.”

The unemployment rate, which soared to as high as 10 per cent during Obama’s first year in office, held near nine per cent for most of last year before falling sharply over the winter.

Still, the jobless rate remains about two percentage points higher than its average over the last 50 years, and the Fed thinks the labor market probably will not post a full recovery for at least another several years.

Many economists think the weakness evident in the labor market over the past two months is largely payback for stronger hiring during a mild winter.

The report showed the private sector accounted for all the job gains in April, adding 130,000 new positions. Manufacturing registered another strong month, adding 16,000 jobs.