Gloom builds for euro zone, United States

[WestVirginiaRebel]

Reuters:

(Reuters) - The euro zone economy worsened markedly last month and U.S. employers cut back on hiring, according to two reports on Friday that dampened hopes for gradual recovery on either side of the Atlantic.

In Europe, the purchasing managers indexes (PMIs), which primarily cover services, suggested a recession across the continent's currency union could now extend to mid-year and be deeper than previously thought.

The gloomy surveys clashed with the picture painted by European Central Bank President Mario Draghi, who on Thursday spoke of a gradual recovery taking place in the euro zone during the course of the year - although he did speak about risks.

In the United States, a government report showed employers added a disappointing 115,000 workers to payrolls last month and, critically, many Americans stopped looking for work. Economists had expected 170,000 new nonfarm jobs, and the report could hurt President Barack Obama as he steps up a re-election campaign that will likely hinge on the state of the economy.

Though the U.S. unemployment rate edged down to 8.1 percent from 8.2 percent, stocks fell sharply as fears grew that the erratic recovery of the world's largest economy was sputtering.

"This shows just how painfully slowly the U.S. economy is growing," said Thanos Bardas, a portfolio manager at Neuberger Berman in Chicago, which manages nearly $200 billion in assets.

The U.S. government did, however, revise upward earlier estimates of payroll growth in February and March, and the euro zone surveys indicated better progress among Chinese companies.

But positive signs were few.

The euro zone surveys raise questions over whether the trillion euros in loans the ECB has pumped into the banking system since December had filtered into the real economy.

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Muddling through the collapse of the welfare state.