The path to economic revitalization in the wake of the coronavirus pandemic took a slight detour last month.
The April 2021 U.S. jobs report saw job numbers increasing at a slower pace than economists predicted, while the unemployment rate ticked up to 6.1%. That represents an 0.1% increase compared to March, and 0.3% above expectations, according to Yahoo! Finance.
The number of new jobs created last month fell short of projections by more than 700,000, with total non-farm employment rising by 266,000, as opposed to the 1 million-plus gains economists were forecasting for April.
The unexpected downturn was likely the result of “shortages of workers and raw materials as an economic recovery bolstered by rapidly improving public health and massive government aid fueled a boom in demand,” Reuters reported.
Ultimately, the April report, which was released Friday, found 8.2 million fewer U.S. jobs than in February 2020, just as the coronavirus came to American shores.
Scott Ruesterholz, portfolio manager at Insight Investment in New York, points out that the upheaval caused by COVID-19’s arrival was bound to be felt long afterward.
“We have warned frequently that the COVID-19 shock last spring would echo through the seasonally adjusted data and cause significant volatility,” Ruesterholz told Reuters. “That is likely what is happening with this report.”
The leisure and hospitality sector reaped the biggest job gains last month, adding 331,000 workers, although the industry is still 3 million jobs short of pre-pandemic levels.
The increase in the unemployment rate was accompanied by a larger-than-expected bump in the labor force participation rate, which suggests that more Americans were once again seeking work, according to Yahoo! Finance.
The figures found in the April jobs report could signal that the aforementioned labor shortages “are becoming a significant drag,” Michael Pearce, senior U.S. economist for Capital Economics, told Yahoo!
Ultimately, “it is difficult to judge how much weight to put on this report at a time when most of the other evidence suggests economic activity is rebounding quickly,” said Pearce, “but it is a clear reminder that the recovery in the labor market is lagging the rebound in consumption.”
President Biden addressed the underwhelming report in a Friday press conference. Acknowledging that job growth slowed down last month, Biden also urged patience, noting the American Rescue Plan that he outlined on his first day in office was intended to foster long-term development, and that progress could sometimes be slow.
“The American Rescue Plan was [designed] for the whole year [of 2021]. It plays out over a year. And it’s working,” Biden said. “But we can’t let up. This jobs report makes that clear. We’ve got too much work to do.”
About the Author
Mark McGraw is managing editor of Workspan