U.S. payroll gains in April fell far short of expectations.
Data from the Labor Department on Friday showed that non-farm employers added just 266,000 jobs, sending the unemployment rate back up to 6.1 percent from 6.0 percent. Estimates from economists were for a much higher number, possibly as much as 1 million new jobs, which would have lowered the unemployment rate to 5.8 percent.
April also saw little change in retail trade employment, down just 15,000 jobs following a 33,000 gain in March. Jobs at apparel and accessories stores rose by 10,000 in April. In general, employment in retail trade overall was still 400,000 lower than in February last year.
“April marked a very disappointing moment in what had been a rapidly improving jobs market. Nonfarm employment grew by a relatively subdued 266,000 in April, after a downwardly revised increase of 770,000 in March,” said Gad Levanon, vice president, labor markets at The Conference Board.
The original estimated figure for March was 916,000 jobs. February did report some good news as the number of jobs employers added was revised upward to 536,000 from 468,000.
According to Levanon, the true jobless rate, after adjusting for misclassification error, remained unchanged at 6.4 percent. “Overall, the U.S. economy is still down 8.2 million compared to February 2020 levels,” he said.
Levanon said that while April’s report is too soon to call a trend, the lackluster jobs growth leaves him less optimistic about the number of jobs that could be added in the rest of 2021. That said, he does expect that as the local economies open up, there will be more room for growth at in-person services, such as restaurants. How it all shakes out is a bit unclear. As people frequent restaurants, fewer workers are needed in food stores. And as more people shop in person, fewer workers are needed for home deliveries, he said. But as confidence builds over the economic outlook, Levanon expects more employers to add full-time staffers, relying less on the gig economy.
Wells Fargo economist Sarah House said April’s weakness is probably “attributable to shortages of both labor and physical inputs limiting activity and thereby hiring.” She said the jobs recovery is likely to get back on track over the next few months.
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House said the job losses extend beyond manufacturing. That means that the “reorientation back toward ‘normal’ will not be smooth,” she said.
Friday’s jobs report confirms what some companies have been noting—that they can’t get the help they need. While supply issues affecting inputs are one possible reason, another could be a mismatch between workers’ skills and job openings, she said.
The labor trends and possible worker shortage are raising another concern. “The slow return of workers at a time when demand is booming is generating more wage pressures that are notably stronger than the recovery and early expansion of the past cycle,” House said. “While we do not expect wage growth is about to take off, the stronger trend already this cycle feeds into our expectations that inflation is likely to settle at a higher rate after it pops this year.”
Qurate Retail Group CEO Mike George also noted inflationary concerns, including wage pressures, in the retail sector Friday.
Separately, men’s shoe retailer Johnston & Murphy on Friday sent out emails to its customers noting that “We’re Hiring.” The Genesco-owned retailer touted a “fantastic discount, flexible schedule and working with the finest in fashion,” telling recipients that if they or people they know are interested, applicants should head to the careers tab at the company website for more information about how to apply.