- Nonfarm payrolls disappointed on a massive scale in April, rising by only 266k jobs against expectations for a million. The unemployment rate rose very slightly from 6.0% to 6.1% as the labor force rose more than employment.
- On top of the headline hiring disappointment, hiring in March was revised down to 770k from 916k. On net, revisions to February and March subtracted 78k jobs.
- Job gains accelerated in leisure and hospitality, up 331k after 206k gain in March, as pandemic restrictions continued to be eased in parts of the country. Restaurants and bars added back 187k workers. Leisure and hospitality employment is still down 16.8% versus pre-pandemic levels. Hiring was also up in other services (+44k), local government education (+31k), social services (+23k) and financial activities (+19k).
- Disappointment came in professional and business services (-79k), as temporary help services shed 111k jobs. Transportation and warehousing also lost jobs (-74k), as couriers and messengers and warehousing and storage lost 82k positions. Retail trade saw modest job losses (-15k), as did health care (-4k). Employment in construction was flat and manufacturing lost 18k jobs.
- In a small silver lining in an otherwise gray report, the participation rate ticked up to 61.7% as 430k people joined the labor force. This was larger than the 328k new jobs in the household survey, driving the unemployment rate slightly higher. The employment to population rate also rose to 57.9%.
Key Implications
- In contrast to a lot of optimistic data on the U.S. economy, the job market massively disappointed in April. While 266k new jobs is respectable in normal economic times, it is not when an economy is rebounding from massive losses, and jobs remain 8.2 million below their pre-pandemic level. There are elements that suggest some of this represents a structural shift in where jobs are – with losses concentrated in sectors associated with online activity, and jobs that may have been temporary during the pandemic. However, a lot of other sectors that are advancing in growth terms saw minimal hiring or slight losses.
- Economists generally don’t like to put too much stock in one month’s number, and perhaps it was optimistic of us to assume the sort of massive gains seen in March would continue back-to-back. This sort of stop-start pace of hiring means the job market recovery could be more laborious than hoped. Optimistically, given all the headlines recently on labor shortages, it is encouraging to see people returning to the labor force. We continue to expect that with government stimulus and ongoing vaccinations supporting a release of pent-up demand that hiring will return to a more solid pace over the coming months.
