(Washington Insider Magazine) – The US added just 266,000 jobs in April — far below economists’ expectations of 1 million — and the unemployment rate rose slightly to 6.1 percent, the feds said Friday.
The lower-than-expected data comes on the heels of strong gains in March, which saw 770,000 jobs added, about 150,000 lower than initially estimated, according to revised data published Friday.
“Notable job gains in leisure and hospitality, other services, and local government education were partially offset by employment declines in temporary help services and in couriers and messengers,” according to Friday’s closely watched jobs report from the Bureau of Labor Statistics.
The US unemployment rate rose slightly from 6 percent reported in March. It remains far higher than the 50-year low of 3.5 percent reported in February before the pandemic gutted the economy.
Economists surveyed by Dow Jones expected the US to add 1 million new jobs and an unemployment rate of 5.8 percent.
“It’s hard to sugarcoat the numbers that came out this morning,” said Curt Long, chief economist at the National Association of Federally-Insured Credit Unions. He added that it’s just one month’s report and he’s still optimistic that May will prove to be a stronger month of job gains.
Long identified “three big candidates” that are holding back the job market: fear of COVID-19, unemployment benefits and child care issues. He said the new data gives more weight to the argument that labor supply remains weak because people are relying on pandemic-boosted government benefits instead of seeking jobs. Women, in particular, may also be declining to re-enter the workforce because they need to care for children, he added.
The leisure and hospitality industry, among the hardest hit by the pandemic, saw the biggest hiring gains in April by far, adding 331,000 workers, according to the federal data. Professional business services like lawyers and accountants lost over 111,000 in temporary help jobs, the data showed. Transportation and warehouse jobs fell by about 74,000 while the manufacturing sector lost about 18,000 jobs, the feds said.
Long said the decline in manufacturing jobs was likely due to the microchip shortage that’s hit various industries such as automakers hard this year.
The newly released data comes after weeks of strong numbers signaled a robust and rapid recovery. Last week, the feds released data that showed America’s gross domestic product — the value of all goods and services produced here — grew by 6.4 percent from January to March on an annualized basis.
Outside of the third quarter of 2020, when the economy grew more than 30 percent, it was the best quarter for the GDP since 2003. And on Thursday, the Labor Department reported new weekly jobless claims dipped below 500,000 for the first time since March 14 of last year, signaling that layoffs are slowing.
“As long as the vaccination numbers continue to improve and cases don’t start to really move up, then I think people are going to be pretty confident that it’s just a matter of time,” Long said of the continued economic recovery. “At some point, this summer, this fall, we’re going to be making really, really good headway.”
While many economists remain bullish on the future of the recovery — so long as vaccinations and public health measures continue to keep the coronavirus at bay in the US — some economists are emphasizing patience as the country maneuvers what could be a bumpy path to economic growth.
“The disappointing figure emphasizes the path to recovery in the labor market is not as linear as some market participants are expecting,” said Charlie Ripley, senior investment strategist for Allianz Investment Management, adding that the data indicate lower-paying jobs haven’t yet come back. “Overall, the weaker-than-expected employment data validates the Fed’s stance that patiently waiting for progress in the labor market recovery before preemptively scaling back accommodation was the correct policy action.”
Over the past couple of weeks, major US companies reported strong earnings that indicated a robust pickup in consumer spending and overall economic activity. Ride-hailing company Lyft, for example, reported stronger-than-expected ridership numbers Tuesday in a sign that US transit is gaining steam. And Amazon announced last week that it was hiking pay for more than half a million of its workers.
There are, however, factors holding the economy back. Prices of various commodities are surging due to shortages connected to supply-chain issues and other factors. The problems are driving up prices of consumer products from diapers to houses, and some economists expect the country to be grappling with inflation for months, at least.
And business owners, especially in the retail and travel industries, have said they’re struggling to recruit new workers. Some economists and companies have blamed pandemic-boosted government stimulus for making it more attractive to remain on public benefits than a private payroll.
“This jobs report was quite the disappointment, suggesting businesses very well could be having trouble hiring amid the reopening,” said Ryan Detrick, chief marketing strategist for LPL Financial. “As poor as today’s jobs growth was relative to what was expected, we still believe the reopening is coming and future months should make up for this miss.”