WASHINGTON D.C.: U.S. job growth fell in April, likely hit by raw material and worker shortages, amid an economic boom aided by improving public health and massive government aid.
The Labor Department's employment report on Friday indicated a drop in temporary help jobs, as well as those in manufacturing, retail and courier service employment, sparking a heated debate about the generosity of unemployment benefits, which pay more than most minimum wage jobs.
The White House dismissed complaints from the U.S. Chamber of Commerce about the unemployment checks causing worker shortages.
Economists attributed the shortage to fear among workers to return to work despite all Americans being eligible to receive COVID-19 vaccinations. Others cited problems with child care, as online classes continued in many school districts.
"The employment gain is understated, in part because of the generous largess from Washington," said Sung Won Sohn, a finance and economics professor at Loyola Marymount University in Los Angeles. "Short-staffed restaurant owners are working overtime, truck drivers are impossible to find, even after a hefty increase in hourly wages, and loading docks at warehouses are keeping trucks idle as there aren't enough workers."
Non-farm payrolls increased by only 266,000 jobs last month, while data for March showed 770,000 jobs added, instead of 916,000 as previously reported. That left employment 8.2 million jobs below its peak in February 2020.
Twelve months ago, the economy purged a record 20.679 million jobs during the first wave of COVID-19 infections, which could have thrown off the model that the government uses to adjust data for seasonal fluctuations, resulting in the April payrolls number being below forecasts.
Unadjusted payrolls increased by 1.089 million jobs after rising by 1.176 million in March.
"We have warned frequently that the COVID-19 shock last spring would echo through the seasonally adjusted data and cause significant volatility," said Scott Ruesterholz, portfolio manager at Insight Investment in New York. "That is likely what is happening with this report."
The report did not change expectations that the economy entered the second quarter with strong momentum and was on track for its best performance in almost four decades.
Meanwhile, stocks on Wall Street were trading higher. The dollar was weaker against a basket of currencies. Prices of longer-dated U.S. Treasuries fell.
As more Americans were vaccinated, restrictions on businesses were lifted and qualifying households received $1,400 stimulus checks in March, demand surged, putting a further strain on supply chains, but contributing to the economy's 6.4 percent annualized growth pace in the first quarter, the second-fastest since the third quarter of 2003.
Leisure and hospitality gained 331,000 jobs in April and Government employment picked up as some school districts hired more teachers for in-person learning.
But temporary help services employment dropped by 111,400 jobs, manufacturing employment fell by 18,000 jobs and payrolls at motor vehicle manufacturers dropped 27,000.
In the transportation and warehousing industry, employment for couriers and messengers fell by 77,000. Retail employment dropped by 15,300 jobs, while construction payrolls were flat.
The unemployment rate rose to 6.1 percent in April, from 6.0 percent in March, as 430,000 people entered the labor force. The jobless rate has been understated by people misclassifying themselves as being "employed but absent from work."
Without this misclassification, the unemployment rate would have been 6.4 percent in April. The labor force participation rate jumped to 61.7 percent from 61.5 percent in March, dominated by men. Women, who account for most of the at least 4 million people still outside the labor force, dropped out.
That could reinforce President Joe Biden's plan to spend another $4 trillion on education and childcare, middle- and low-income families, infrastructure and jobs. It also supports the Federal Reserve's ultra-easy monetary policy stance.