By Sarah Chaney Cambon and Gwynn Guilford
Hiring unexpectedly slowed in April, a sign the recovery faces
temporary setbacks as many businesses struggle to find workers or
remain cautious about the economic outlook.
U.S. employers added a modest 266,000 jobs in April, far short
of the one million economists had forecast and the weakest monthly
gain since January, Friday's Labor Department report showed. The
deceleration came after payrolls rose a downwardly revised 770,000
The unemployment rate ticked up to 6.1% in April from 6% a month
earlier, partially reflecting an increase in people entering the
Higher vaccination rates, fiscal stimulus and easing business
restrictions are converging to support stronger spending across the
U.S. The economy emerging from pandemic-related disruptions is also
encountering restraints on job gains and broader economic activity,
as imbalances in supply and demand for goods, services and labor
play out in the coming months.
Some businesses are cautious about ramping up hiring, given the
pandemic and related uncertainty continues. Others are reporting
they can't find enough workers due to expanded unemployment
benefits, workers' fear of contracting Covid-19 and child-care
burdens due to school closures, economists say.
"It's just taking longer than expected to match people to jobs,"
said Aneta Markowska, chief economist at Jefferies LLC. "But it's
not a question of if, it's a question of when, these jobs do come
Payrolls declined across several industries last month,
particularly those that had benefited from demand earlier in the
pandemic. Temporary-help employment fell by 111,000, manufacturing
employment was down 18,000 -- predominantly in motor vehicles where
semiconductor-chip shortages idled some factories. Retail jobs fell
by 15,000, despite robust consumer spending this spring.
Signs of labor-market tightness also emerged in Friday's report,
aligning with many companies' complaints that they can't find
workers to meet demand.
Wages for workers rose in April as some employers appeared to
lift pay to attract or retain employees. Average hourly earnings
for private-sector employees rose by 21 cents to $30.17 in April.
The gain is notable because strong hiring in the lower-wage
hospitality sector -- which occurred in April -- would typically
put downward pressure on average earnings.
The average workweek increased to 35 hours in April, an
indication some employers added worker hours to compensate for the
lack of labor.
Mercury Marine, a boat-engine manufacturer based in Fond du Lac,
Wis., is ramping up overtime hours so it can make enough engines as
it tries to find more workers.
The company plans to add 250 manufacturing employees to its main
campus this year. But Fond du Lac's unemployment rate of about 4%
is well below the national average, meaning there are relatively
few people in the area available to work, said Chris Drees, the
manufacturing company's president.
"If we can't get those employees, it will certainly hinder our
ability to produce," Mr. Drees said.
The labor-force participation rate, or share of people working
or seeking work, logged in at 61.7% in April, the highest rate
since August. Rising labor force participation should help
companies fill jobs in the coming months, though it will take time
for some people, like mothers, to return from the sidelines.
Participation among women aged 25 to 54 fell to 75.1% in April
from 75.2% a month earlier, while participation among prime-age men
rose to 87.8% from 87.6% in March.
Under relief bills passed by Congress, those receiving jobless
benefits get an additional $300 a week on top of regular state
benefits, which average $318 a week, according to the Labor
Department. That means the average unemployment recipient earns
better than the equivalent of working full time at $15 an hour.
Those enhanced benefits are available until September, for a
maximum of nearly 18 months -- about three times longer than most
states typically allow.
Some employers and economists say enhanced unemployment benefits
in the latest pandemic-aid package is one factor affecting job
growth. The U.S. Chamber of Commerce on Friday asked policy makers
to end the additional benefits.
"The disappointing jobs report makes it clear that paying people
not to work is dampening what should be a stronger jobs market,"
said Neil Bradley, Chamber executive vice president and chief
Democrats, who control Congress and the White House, say the
enhanced payments are needed while the economy continues to
"We're seeing that the economy is definitely recovering, but
there are still millions of people in economic pain," Labor
Secretary Marty Walsh said. "I don't feel that unemployment
insurance is discouraging people from looking for work," he added,
citing other factors such as the need to get more people vaccinated
and limited child-care options.
A U.S. Census survey conducted in the second half of April found
that about 6.8 million people hadn't worked in the past seven days
because they were caring for children not in school or daycare --
in line with the average number reporting such conflicts since June
Nearly six million cited not wanting to be employed at this
time, the highest number since the survey began last June. Another
4.2 million weren't working because they were worried about getting
or spreading the virus on the job, the same as in late March, but
down from more than five million in the winter months.
Federal Reserve Chairman Jerome Powell recently said that while
the labor market and overall economy have improved recently the
central bank wants to see further progress before reducing its
support during the recovery. "It's not time yet," Mr. Powell said
after the Fed's April rate policy meeting.
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.
Paul Keeler, owner of two barbecue restaurants and a steakhouse
in Arizona, said sales across the three restaurants surged by 17%
at the start of this year compared with the beginning of 2019, when
he said business was hot.
"The pent-up demand has been tremendous," Mr. Keeler said.
"Because we've been so busy, we've been interviewing and hiring
Regions that suffered more from the pandemic and imposed greater
restrictions are showing signs of faster rebounds. For example,
Homebase data indicated that small-business employment in Florida
has held relatively steady since October 2020, compared with steep
climbs in New York and California since January. The number of
workers clocking in at New Mexico small businesses is now up nearly
3% from levels seen last autumn.
Heritage Hotels & Resorts has seen a pickup in customer
bookings in the past month as New Mexico eases restrictions, said
Molly Ryckman, the company's vice president of sales and marketing.
Earlier this week, New Mexico officials lifted hotel occupancy
restrictions in counties where Heritage operates several boutique
hotels. Restrictions were relaxed in the other counties in which it
operates a few weeks ago.
Heritage has added hundreds of workers in the last couple of
months, though staffing is still less than half of pre-pandemic
levels. The company currently has 150 open jobs but is struggling
to quickly fill the positions. As a result, it is increasingly
looking at candidates without previous hospitality experience, Ms.
"Especially in a destination like Santa Fe, when you shut down
every museum and every restaurant and all of those are reopening at
the same time, it makes it a challenge to fully staff and reopen,"
Eric Morath contributed to this article.
Write to Sarah Chaney Cambon at email@example.com and Gwynn
Guilford at firstname.lastname@example.org
(END) Dow Jones Newswires
May 07, 2021 13:21 ET (17:21 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.