Employers added a disappointing 266,000 jobs in April even as the number of new COVID-19 cases stayed low, more states lifted constraints and vaccinations accelerated.
The gains fell well short of projections in a recovery that’s expected to gather force through the summer, with a million or more jobs added each month.
The unemployment rate rose from 6% to 6.1% as a large increase in the labor force — the number of Americans working or looking for jobs — more than offset solid employment gains, the Labor Department said Friday.
Economists had estimated that 995,000 jobs were added last month, according to a Bloomberg survey. Instead, gains for February and March were revised down by a total 78,000, with March’s blockbuster 916,000 additions downgraded to 770,000.
Economists proposed a variety of possible reasons for the poor showing, including worker shortages, a shift away from industries that thrived while in employment as COVID eases
Leisure and hospitality, which includes restaurants and bars — the industry hit hardest by payroll losses — continued to recover, adding 331,000 jobs. But other sectors had weak showings.
Where jobs got cut
Professional and business services lost 79,000 jobs as staffing agencies cut 111,000 positions. Transportation and warehousing, which boomed as Americans largely stayed home during the pandemic, cut 74,000 jobs. Retail lost 15,000 jobs; manufacturing shed 18,000; and construction employment was unchanged after a massive gain the prior month.
The public sector added 48,000 jobs. More schools are reopening for in-person classes, bolstering employment in local public education education, which added 31,000 jobs. That’s also allowing more parents to return to the workforce.
Job growth is expected to boom in the coming months. Oxford Economics reckons a record 8 million or so jobs will be added this year.
New COVID cases held steady at a low level through April while increasing vaccinations led more states to lift capacity limits at restaurants and other businesses. About one-third of the U.S. population has been fully vaccinated, according to the Centers for Disease Control and Prevention. That has prompted eateries and other outlets to recall more furloughed workers or ramp up hiring.
Temporary, permanent layoffs rise
But after falling steadily throughout the health crisis, the number of Americans on temporary layoff rose by 88,000 to 2.1 million last month, suggesting some businesses continued to furlough workers even as others rehired staffers. About 21% of unemployed workers said they were on temporary layoff, largely unchanged from the previous month. That means many workers could still be brought back to their old jobs.
The ranks of Americans permanently laid off rose by 97,000 to 3.5 million and represents a longer-lasting scar for the economy.
Hiring is still expected to pick up sharply this spring and summer. States are reopening just as households are benefiting from massive income gains that have juiced spending. Americans are flush with two rounds of government stimulus checks — totaling $2,000 for each individual — disbursed since December and enhanced unemployment benefits as part of $2.8 trillion in COVID relief.
But many employers say the jobless benefits – including a $300 federal supplement – are contributing to their biggest problem: a shortage of workers despite unemployment that remains historically high. The crunch could have been a factor in holding down April’s job gains.
Kyle Ewing, president of TerraSlate, which makes and prints waterproof menus and other products, says revenue was up 55% last month compared to February as more states allowed restaurants to raise occupancy limits.
“We’ve been phenomenally busy,” he says.
Ewing, who set out to double his staff of eight, got lots of resumes. Yet some candidates told him they applied just to meet job-search requirements for unemployment insurance but preferred to continue receiving the generous benefits rather than work. With the payments set to expire in September, he believes that attitude may be slowly shifting and Ewing has brought on five workers in recent weeks.
There are other reasons for the worker shortages. Many people still worry about job hunting during a pandemic while others are caring for children who are distance learning at home, says Becky Frankiewicz, president of staffing firm Manpower Group.
“There are more job openings than before the pandemic hit, and fewer people in the labor force,” she says.
“Health concerns and child/elder care issues are likely weighing on payroll growth,” Rubeela Farooqi, chief U.S. economist of High Frequency Economics wrote in a note to clients. “We would expect gains to accelerate as constraints ease and the economy moves closer towards normal capacity.”
WoShortages are especially acute in manufacturing and warehouse jobs, says Amy Glaser, senior vice president at staffing company Adecco. More candidates have been “ghosting” employers, or not showing up for interviews or the first day of work, she says.
Hiring is picking up
Candidates who want a job say hiring is picking up. Bill Noirot, 65, of St. Charles, Illinois, lost his sales position at a software company last June because the firm worried business customers would cut purchases in the uncertain environment.
He relentlessly sought a new job and had about 40 phone interviews but didn’t sense employers were intent on hiring until recently. He landed a position in late February and started in March. “It just seemed like they were getting more serious as time went on,” once vaccines became widely available, brightening the economic outlook.
Other measures of the economy and job market have been pointing up. Between Labor’s March and April employment surveys, initial jobless claims, a gauge of layoffs, fell by 200,000 to 566,000. And employment at small businesses reached its highest level since October, according to Homebase, which provides employee scheduling software.
Originally Appeared On: https://insurancenewsnet.com/oarticle/economy-added-far-fewer-jobs-than-expected-last-month