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April employment data to point to sluggish economy

By Lucia Mutikani

WASHINGTON (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 swoon.

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).


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