US jobs growth slumps

5 May 2012, 10:54 am   -   Source: AAP
Job ads. (AAP)

Job ads. (AAP)

The US has reported a drop in the unemployment rate, but much of that can be attributed to people giving up the search for work.

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US job growth slumped in April for a second straight month, suggesting an economy that is growing steadily but still sluggishly.

A drop in the unemployment rate wasn't necessarily a healthy sign for the job market. The rate fell from 8.2 per cent in March to 8.1 per cent in April. But that was mainly because more people gave up looking for work.

People who aren't looking for jobs are not counted as unemployed.

The 115,000 jobs added in April were fewer than the 154,000 jobs added in March, a number the government revised up from its earlier estimate of 120,000. It also marked a sharp decline from December through February, when the economy averaged 252,000 jobs per month.

The percentage of adults working or looking for work has fallen to its lowest level in more than 30 years. Many have become discouraged about their prospects.

Job creation is the fuel for the nation's economic growth. When more people have jobs, more consumers have money to spend - and consumer spending drives about 70 per cent of the economy.

US Republican presidential hopeful Mitt Romney said that drop in the unemployment rate could be explained by the declining number of people seeking work.

"This is way off from what should be happening in a normal recovery," Romney told Fox News.

"You have more people dropping out of the workforce than you have getting jobs. This is not progress."

President Barack Obama pushed back, saying businesses have added about one million jobs in the past six months. Speaking at a school in Arlington, Virginia, the president said: "we're going to have to do more" to recover jobs lost during the recession.

The percentage of Americans aged 16 and older working or looking for work is now 63.6 per cent, the lowest since 1981. For men, the so-called "labour force participation rate" is 70 per cent. That's the lowest since the government started keeping records in 1948.

More women, especially in upper-income families, are staying at home. The drop in the participation rate accelerated after the economy slid into recession in late 2007. The tough job market led many to give up looking for work.

The stock market did not take Friday's news well.

The Dow Jones industrial average closed down 168 points, or about 1.3 per cent. The broader Standard & Poor's 500 index sank 1.6 per cent.

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