April report to show whether weak hiring persisted

WASHINGTON (AP) -- A report Friday on April employment could show whether weak hiring in March marked a temporary lull or the fourth year in which a slumping economy has slowed job growth.

Economists predict that the job gains likely improved on March's 88,000 — the fewest in nine months. But the hiring isn't expected to be much better. Most analysts think employers in April added more than 100,000 jobs but far fewer than the 196,000 that were added on average from September through February.

The unemployment rate is expected to remain unchanged at a still-high 7.6 percent.

The Labor Department will release the report at 8:30 a.m. EDT.

Economic figures in recent days have been mixed. The government said Thursday that the number of Americans applying for unemployment aid fell last week to a seasonally adjusted 324,000 — the fewest since January 2008.

Unemployment applications reflect the pace of layoffs: A steady drop means companies are shedding fewer workers. Eventually, they'll need to hire to meet customer demand or to replace workers who quit.

At the same time, surveys have shown that hiring by private companies was weak and that manufacturing activity declined in April. And exports fell in March.

The economy grew in the January-March quarter at an annual pace of 2.5 percent, much better than in the previous quarter. Economists worry, though, that federal spending cuts and higher Social Security taxes could hurt the economy. And new requirements under the federal health care law may be causing some small and midsize companies to hold back on hiring.

Analysts forecast that growth will slow in the current quarter to 2 percent or less. That could mean that job growth will remain sluggish at least through summer.

Economists at Bank of America Merrill Lynch forecast that the spending cuts could reduce April's job gains by 25,000. That figure would include layoffs by government agencies and defense contractors.

The higher Social Security tax has cut take-home pay for nearly all working Americans. It's reduced pay for a typical household earning $50,000 by about $1,000 this year. A household with two highly paid workers has up to $4,500 less.

Consumers, so far, have shown resilience despite the tax increase. Americans boosted their spending from January through March at the fastest pace in more than two years.

But their spending slowed toward the end of the first quarter. And in March, consumers cut back their spending at retail stores by the most in nine months. Most economists think consumer spending is slowing further in the current quarter.

Still, some reports suggest that hiring could pick up later in the year. Applications for unemployment benefits fell to a five-year low last week, signaling fewer layoffs and potentially more job gains.

Americans are buying cars at a healthy pace, prompting some automakers to add jobs. Auto sales rose 8.5 percent in April compared with a year ago to nearly 1.3 million — the best April total since before the recession began.

Home prices are rising, a trend that makes homeowners feel wealthier and more likely to spend. Higher home prices are also encouraging some people to buy homes before prices rise further.

Cheaper gas could also get people spending more. The national average for a gallon of regular on Wednesday was $3.52, 11 cents less than a month ago and 28 cents below the year-ago level.

Consumer confidence rose in April. The outlook improved mostly because Americans expect the economy to deliver more jobs and higher pay in the next six months.