Pandemic Recovery Slows as Employers Add Just 266,000 Jobs

April’s labor market growth fell well below expectations of about a million new jobs and the unemployment rate ticked up.

A man walks past a now-hiring sign outside a Marc’s Store in Mayfield Heights, Ohio, in January. (AP Photo/Tony Dejak, File)

(CN) — The U.S. economy added only 266,000 jobs last month, marking a sharp slowdown in hiring and raising concerns over the pace of recovery from the coronavirus pandemic.

While the gain would represent a healthy number in normal times, it marks an unexpected disappointment as economics had predicted 1 million or more new jobs in April. By comparison, a revised 770,000 jobs were added in March.

Meanwhile, the unemployment rate rose from 6% to 6.1%, the Labor Department reported Friday.

“To put it mildly, today’s report did not meet expectations. This might be one of the most disappointing jobs reports of all time,” said Nick Bunker, economic research director at Indeed Hiring Lab.

He added, “The labor market needs to gain 8.2 million jobs to put us back to where we were pre-pandemic, not accounting for the jobs that would have been created if the pandemic never happened. Every month job gains don’t accelerate puts us further behind.”

The leisure and hospitality industry, which includes establishments hit hardest by the pandemic like restaurants and bars, gained 331,000 jobs in April as businesses reopen and more Americans get Covid-19 vaccine shots. Nearly a third of the U.S. population is fully vaccinated.

The local government education field added 31,000 positions last month and social assistance gained 23,000, about half of which were in child day care services. However, both sectors are still hundreds of thousands of jobs short of pre-pandemic levels.

Last month’s gains were offset by losses of 79,000 professional and business services jobs, 74,000 in transportation and warehousing, 18,000 manufacturing positions and 15,000 retail jobs.

“Sometimes you have to accept unexpected bad news, move forward, and hope for better news in the future,” Bunker wrote. “April’s report isn’t what we were hoping for, but hopefully with continued progress against the coronavirus, we’ll see better numbers in the months ahead.”

Elise Gould, senior economist at the nonprofit think tank Economic Policy Institute, said the growth in the leisure and hospitality is an encouraging sign of increased demand for labor. She noted that the uptick in unemployment is due to more people returning to the workforce in search of jobs.  

“The labor force increased by 430,000 workers in April, the largest gain in six months,” she wrote. “Likely in response to improving public health metrics and increased expectations of job opportunities, more and more workers are actively returning to the labor force in search of work.”

Gould also noted that while the U.S. economy is officially down about 8.2 million jobs compared to February 2020, the real shortfall is more likely in the range of 9 to 11 million when considering the jobs that would have been created if not for the pandemic.

“Now is not the time to turn off vital relief—including expanded unemployment benefits—to workers and their families,” she said.  

President Joe Biden’s American Rescue Plan, passed in early March, extended emergency unemployment benefits through September and included $1,400 direct payments to many Americans.

The Labor Department initially reported that 916,000 jobs were added in March, but Friday’s report revised that number down by 146,000 to 770,000. Meanwhile, February’s gain was revised up for a second time, from 468,000 to 536,000.

Michael Pearce, senior U.S. economist at Capital Economics, called the April numbers a “clear disappointment” but suggested the coming months would be better.  

“With much of the high-frequency data – including jobless claims – still improving rapidly, we doubt it signals the recovery is at risk,” he said.

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