Employers added a disappointing 266,000 jobs in April, even as the number of new COVID-19 cases remained low, more states lifted constraints and vaccinations accelerated.
Gains are well below expectations as part of a recovery expected to strengthen throughout the summer, with a million or more jobs added each month.
The unemployment rate rose from 6% to 6.1% as a sharp increase in the labor force – the number of Americans working or looking for a job – more than offset strong job gains, the Friday said on Friday. Ministry of Labour.
Economists had estimated that 995,000 jobs were added last month, according to a Bloomberg survey. Instead, the gains for February and March were revised down to a total of 78,000, with the March blockbuster 916,000 additions reduced to 770,000.
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Economists have proposed a variety of possible reasons for the poor performance, including labor shortages, an abandonment of industries that thrived while Americans stayed at home during the pandemic, grunts in the supply chain and problems. seasonal adjustment of raw figures by labor.
Leisure and hospitality, which includes restaurants and bars – the industry hardest hit by wage losses – continued to recover, creating 331,000 jobs. But other sectors performed poorly.
Where jobs were cut
Professional and business services lost 79,000 jobs as staffing agencies cut 111,000 positions. Transportation and warehousing, which exploded when Americans stayed home and ordered goods and services online during the crisis, shed 74,000 jobs. Retail trade lost 15,000 jobs; 18,000 manufacturing shed; and construction employment was unchanged after a massive gain the previous month.
“There is some evidence to suggest that this is in part a structural change … with losses concentrated in sectors associated with online activity and jobs that may have been temporary during the pandemic,” wrote economist Leslie Preston of TD Economics. in a note to customers.
The public sector added 48,000 jobs. More schools are reopening for face-to-face lessons, boosting employment in local public education, adding 31,000 jobs. It also allows more parents to return to the workforce.
Job growth is expected to explode again in the coming months. Oxford Economics estimates that a record 8 million jobs will be added this year.
New cases of COVID remained stable at low levels through April, as increased vaccinations led more states to lift capacity limits at restaurants and other businesses. About a third of the U.S. population has been fully immunized, according to the Centers for Disease Control and Prevention. This prompted restaurants and other outlets to recall more workers on leave or to speed up recruitment.
Temporary and permanent layoffs increase
But after falling steadily throughout the health crisis, the number of Americans on temporary layoff increased from 88,000 to 2.1 million last month, suggesting some companies continued to lay off workers even as they did so. that others have rehired staff. About 21% of the unemployed said they were on temporary layoff, which is virtually unchanged from the previous month. This means that many workers could still be brought back to their old jobs.
The ranks of permanently laid-off Americans have increased from 97,000 to 3.5 million and represent a more lasting scar on the economy.
Hiring is expected to increase sharply again this spring and summer. States are reopening just as households enjoy massive income gains that have weighed on spending. Americans are grieved with two rounds of government stimulus checks – totaling $ 2,000 for each individual – disbursed since December and improved unemployment benefits as part of $ 2.8 trillion in COVID relief.
But many employers say unemployment benefits – including a $ 300 federal supplement – are contributing to their biggest problem: a shortage of workers despite unemployment that remains historically high. The tightening could have played a role in sustaining job gains in April.
“Today’s data has made it much easier to argue that the reopening of improved unemployment benefits of $ 300 / week in the March relief bill has reduced labor supply.” , wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a research note. “Benefits are scheduled to expire in September, but maybe people think jobs will be just as easy to find then as they are now, so why take a job today?”
Kyle Ewing, president of TerraSlate, which makes and prints waterproof menus and other products, says revenue rose 55% last month from February as more states allowed restaurants to increase limits occupation.
“We have been extremely busy,” he says.
Ewing, who decided to double his staff to eight people, got many resumes. Still, some applicants told him that they applied simply to meet UI job search requirements, but would rather continue to receive generous benefits than work. With payments set to expire in September, he believes the attitude could slowly change and Ewing has recruited five workers in recent weeks.
There are other reasons for the labor shortage. Many people still worry about finding jobs during a pandemic, while others care for children who receive distance education from home, says Becky Frankiewicz, president of recruiting firm Manpower Group .
“There are more job opportunities than before the pandemic started and fewer people in the workforce,” she says.
“Health issues and issues of caring for children and the elderly are likely weighing on payroll growth,” wrote Rubeela Farooqi, chief US economist at High Frequency Economics in a note to clients. “We would expect the gains to accelerate as the stresses ease and the economy moves closer to normal capacity.”
Shortages are particularly acute in manufacturing and warehouse jobs, says Amy Glaser, senior vice president of recruiting firm Adecco. More and more applicants are “ghosting” employers or not showing up for interviews or on the first day of work, she said.
Candidates who want a job say that hiring is picking up. Bill Noirot, 65, of St. Charles, Illinois, lost his job as a salesperson at a software company last June because the company feared business customers would cut back on their purchases in an uncertain environment.
He relentlessly searched for new employment and had around 40 phone interviews, but did not sense that employers intended to hire until recently. He landed a job at the end of February and started in March. “It just seemed like they got more and more serious over time,” once the vaccines became widely available, shedding light on the economic outlook.
Other measures of the economy and the labor market were highlighted. Between Labor’s March and April employment surveys, initial jobless claims, an indicator of layoffs, fell from 200,000 to 566,000. And small business employment hit its highest level since October, according to Homebase, which provides employee scheduling software.