U.S. employers probably took on fewer workers in April as high energy prices sapped consumer confidence and led to doubts about the strength of the economic recovery.
Nonfarm payrolls are seen rising by 186,000 last month in U.S. government data due on Friday, according to a Reuters survey of economists. In March payrolls rose by 216,000 which was the biggest increase in 10 months.
The Labor Department will release its closely followed jobs report for April at 8:30 a.m. on Friday.
Gains in April would mark seven straight months of net job creation but are unlikely to make much of dent on the pool of 13.5 million Americans out of work.
Hopes for a pick-up in the sluggish pace of U.S. economic growth are pinned on the labor market, but the risk is high that the payrolls data could prove weaker than the forecasts after a batch of recent jobs readings were disappointing.
We are expecting to see some slowing in payrolls in April. It looks like in the first half of the year we are going to see some moderation of growth due to high inflation that is taking a toll on consumers, said Yelena Shulyatyeva, an economist at BNP Paribas in New York.
The unemployment rate is expected to stay at a two-year low of 8.8 percent. It is derived from a separate survey of households which probably showed gains in employment and a rise in the size of the labor force.
The unemployment rate has dropped a full percentage point since November, the largest four-month decline since February 1984, but remains too high for the Federal Reserve to move away from its ultra-easy monetary policy stance any time soon.
The Fed last month signaled it was in no hurry to start withdrawing its massive stimulus for the economy, even as other major central banks around the world have begun to raise interest rates.
High gasoline and food prices clipped U.S. economic growth in first quarter. The economy grew at a 1.8 percent annual rate after expanding at a 3.1 percent clip in the final three months of last year.
The anticipated slowdown in job creation was flagged by a rise in first-time claims for unemployment benefits in recent weeks, and reports that employment growth weakened in the manufacturing and services sectors, as well as data indicating a slowing in hiring by private companies.
Some of the slowdown could be related to automakers laying off temporary workers because of a shortage of parts caused by the devastating earthquake and tsunami in Japan.
The economy has recovered only a fraction of the more than 8 million jobs lost in the 2007-2009 recession. Job growth of between 250,000 and 300,000 a month is needed to make significant strides in reducing unemployment.
WEAKNESS SEEN TRANSITORY
Though the step back in hiring could dampen growth expectations for the April-June quarter, many economists expect it to be transitory as energy prices are expected to stabilize or even come down from their current lofty levels.
We expect to see ongoing moderate job gains for the remainder of this year, said Robert Dye, a senior economist at PNC Financial Services in Pittsburgh.
In a moderate growth economy, we would expect to see conditions get a little bit softer, one month or one quarter, then improve in the next quarter.
The private sector will likely account for all of the job gains last month, with employers expected to have hired 200,000 new workers -- building on March's 230,000 gain.
While that would mark more than a year of continuous job creation, private payrolls are still roughly 7 million below their pre-recession levels.
Government employment is expected to have shrunk for a sixth straight month in April. The bulk of gains in payrolls last month were most likely in the private services sector.
Employment in the goods-producing industries likely slowed again in April, with construction payrolls probably declining and manufacturing hiring moderating somewhat.
The employment report is also expected to show the average work week unchanged at 34.3 hours for a third straight month and no sign of wage inflation, with average hourly earnings rising 0.2 percent after being flat in March.