An expected U.S. hiring boom crashed into a wall in April, with employers adding a measly 266,000 new jobs – sharply missing Wall Street’s expectations – amid a growing shortage of available workers.
The unemployment rate unexpectedly rose to 6.1% — while it’s still well below the April 2020 peak of 14.7%, it’s about twice the pre-crisis level, the Labor Department said in its monthly payroll report, released Friday morning. Economists surveyed by Refinitiv expected the report to show that unemployment fell to 5.8% and the economy added 978,000 jobs.
The figure marks a significant drop from March’s downwardly revised number of 770,000 and February’s upwardly revised 536,000.
There are still 8.2 million fewer jobs than there were last February, before the crisis began.
Although the accelerated vaccine rate, trillions in government stimulus and easing business restrictions seemed to be coming together to support a robust economic recovery, businesses have reported difficulty in onboarding new workers. A recent Bank of America analyst note estimated that 4.6 million workers exited the labor force during the pandemic – and only half are expected to rejoin by the end of the year.
“We’ve known for some time now that there are tensions or mismatches between the demand for workers and a large number of job openings and the large number of unemployed individuals,” Mark Hamrick, senior economic analyst at Bankrate, said. “Many employers report struggling to find available workers. Supply constraints are also limiting further improvement in output.”
The leisure and hospitality industry, the hardest-hit sector, accounted for the bulk of the hiring gains, adding 331,000 workers. But the industry remains 2.9 million workers shy of where it was roughly one year ago.
Local government education increased its payroll by 31,000 as children returned to in-person learning. Social assistance, meanwhile, rose by 23,000, while financial activities increased by 19,000.
But employment in professional and business services tumbled by 111,000 in temporary help. Support services shed another 15,000 positions. Manufacturing lost 18,000 workers, and courier help fell by 77,000.
This is a developing story. Please check back for updates.