By Sarah Chaney Cambon

U.S. employers added a modest 266,000 jobs in April and unemployment rose to 6.1%, signaling a potential slowdown in economic momentum as some businesses struggled to find workers and faced supply-chain issues.

The deceleration came after payrolls rose a downwardly revised 770,000 in March and an upward revision of 536,000 in February, the Labor Department said Friday. Unemployment rose from 6% a month earlier, but more people entered the workforce in April.

Higher vaccination rates, fiscal stimulus and easing business restrictions are converging to support stronger spending across the U.S. But many businesses are reporting they can't find enough workers, a phenomenon that could restrain economic growth in the coming months.

The leisure and hospitality sector, including restaurants, accounted for the bulk of employment creation in April, adding 331,000 jobs. The Labor Department said that reflected an easing of pandemic-related restrictions in many parts of the country.

Those gains were partly offset by job losses in several other sectors. Temporary-help employment declined by 111,000 last month, manufacturing employment was down 18,000--predominately in motor vehicles where chip shortages idled some factories. Retail jobs fell by 15,000 and healthcare jobs declined by 4,000.

Write to Sarah Chaney Cambon at sarah.chaney@wsj.com

(END) Dow Jones Newswires

May 07, 2021 09:09 ET (13:09 GMT)