(WASHINGTON) - U.S. employers pulled back on hiring in April for the second straight month, a sobering reminder that the economy remains weak.
The unemployment rate fell to 8.1 percent, but only because more people gave up looking for work. The Labor Department says employers added 115,000 jobs in April.
That's below March's upwardly revised 154,000 jobs and far fewer than the pace from earlier this year. The unemployment rate has fallen a full percentage point since August to a three-year low.
But last month's decline was not due to job growth. The government only counts people as unemployed if they are actively looking for work. In April, the percentage of adults working or looking for work fell to the lowest level in more than 30 years..
The economy created an average of 246,000 jobs a month from December through February. The hiring slowdown in March sparked fears that job growth was weakening.
Some economists have said that a mild winter led some companies to accelerate hiring in January and February. That may have weakened March's figures. For many, April's report will serve as more of a bellwether.
Mixed data on hiring at U.S. factories and service companies, along with a temporary spike in unemployment benefit applications, has heightened interest in Friday's report.
"Given the mixed signals ... (Friday's) jobs report will play an enormous role in shaping expectations about the state of the economy," John Ryding, an economist at RDQ Economics, said in a note to clients.
The economy must create at least 125,000 jobs a month just to keep pace with population growth. It generally takes twice that number on a consistent basis to rapidly lower the unemployment rate.
The rate has fallen from 9.1 percent in August to 8.2 percent in March. Part of the reason for the rapid decline is that some people have given up looking for work. People who are out of work but not looking for jobs aren't counted among the unemployed.
Even with the decline, President Barack Obama is likely to face voters this fall with the highest unemployment rate of any president since World War II.
Economists surveyed by the Associated Press said hiring should be sufficient to push the unemployment rate below 8 percent by Election Day. The 32 economists surveyed by the AP see steady job gains averaging 177,000 a month for the rest of this year. That should be enough to lower the unemployment rate to 7.9 percent by November.
There have been some signs that hiring will improve.
The number of people seeking unemployment benefits fell last week by the most in a year, the government said Thursday. But applications are still higher than they were in March, suggesting April's report could still be weak.
And earlier this week, the Institute for Supply Management, a private trade group, said factory activity grew at the fastest pace in 10 months and a gauge of manufacturing employment showed that hiring jumped.
Still, service companies expanded in April at the slowest pace in four months, according to a separate ISM survey. And the group said hiring at those companies, which employ roughly 90 percent of the work force, slowed.
The economy expanded at a 2.2 percent annual rate in the January-March quarter, down from 3 percent growth in the fourth quarter. Economists polled by the AP forecast the economy will grow 2.5 percent this year. In a healthy economy, that would be considered average. But faster growth is needed to spur greater job creation.
Consumers increased their spending in the first quarter at a 2.9 percent annual rate, the largest gain in a year. But Americans also saved less, a trend that economists worry isn't sustainable.
And incomes rose in the first quarter at the slowest pace in two years. That could weigh on consumer spending in the coming months. Economists hope that ongoing job growth will boost incomes and fuel more spending.