By Robin Harding in Washington and Michael Mackenzie in New York
Last updated: May 4, 2012 8:32 pm

Weaker-than-expected US jobs growth hit financial markets and cast a shadow over President Barack Obama’s plans for a formal launch of his re-election campaign this weekend.

US crude oil prices fell more than $4 a barrel and were trading below $100 for the first time since early February after data showed the economy added only 115,000 jobs in April compared with expectations of 162,000. The S&P 500 dropped as much as 1.5 per cent while yields on US and German 10-year government bonds fell.

Mike McCudden, head of derivatives at Interactive Investor, said: “The penny has dropped with investors that the US recovery is not strong enough to lead the world out of the mire.”

Mr Obama will mark the official start of his campaign with rallies in the crucial swing states of Virginia and Ohio as his Republican rival, Mitt Romney, demanded: “Where are the jobs?”

Although disappointing, economists said the April payrolls number was not weak enough to prompt fears of a serious slowdown in the world’s largest economy. But it underscored the challenge for Mr Obama in defending an economic record that has seen a slow recovery from US’s deepest postwar recession.

The unemployment rate fell from 8.2 to 8.1 per cent but that was more a sign of economic weakness than strength as it was driven by people leaving the labour force. The proportion of Americans either working or looking for work fell to its lowest level since 1981.

The jobs report suggested the economy continued to plod slowly forward, rather than sliding back towards recession, economists said. Jobs figures for March and February were revised upward by 53,000. Adding those to April’s 115,000 produced a total very close to market expectations.

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