April Job Gains Disappoint as Unemployment Rate Ticks Up
Hiring in April was much lower than the majority of economists anticipated, with last month’s gain well below the consensus expectation of about one million jobs.
Roughly 266,000 jobs were added to payrolls in April on a seasonally adjusted basis, according to the Bureau of Labor Statistics (BLS). This was the weakest monthly gain since January but still above the pre-pandemic monthly average gain of about 200,000 jobs. Compounding the disappointing results, revisions to the previous two month’s gains resulted in a net decrease of 78,000 jobs.
The headline unemployment rate inched up to 6.1% from 6% in March as more people reentered the workforce but have yet to find a job. (The labor force includes both employed and unemployed persons.) The number of unemployed increased by about 100,000 in April but the civilian labor force (CLF) increased by more than 400,000, pushing the CLF participation rate up to 61.7% from 61.5% in March. Factors thought to be holding back a stronger recovery include fear of catching COVID-19 despite increasing vaccination rates, lack of daycare options as schools slowly reopen classrooms, and difficulty in finding workers as the $300-a-week federal jobless supplement remains in place until September 6.
Compared to last April – the first full month of shutdowns – the number of unemployed has shrunk from 23.1 million to 9.8 million while the number of people not in the labor force has decreased by more than three million. From the low base of employed in April 2020 of about 130.1 million, current employment of 144.3 million indicates about 14.2 million jobs have returned in the past 12 months. We are still about 8.2 million jobs below the pre-pandemic employment level from February 2020.
In other April BLS data, annual hourly earnings growth for all employees was only 0.3% after an annual gain of 4.2% in March. While there is undoubtedly upward pressure on wages due to a lack of available workers (especially in the lower-wage restaurant and hospitality industry), the high number of returning low-wage workers relative to higher-wage workers is keeping wage growth flat in April. While the monthly gain was $0.21, the annual change in wages was just $0.10, bringing the average hourly earnings of all employees to $30.17 in April 2021.
Concerns that daycare issues may be keeping people from rejoining the workforce (especially women) are borne out by the annual change in the CLF participation rates for men and women aged 20 or more. The current participation rate for men 20 years and over is 69.8%, 120 basis points (bps) higher than last April but still 180 bps lower than February 2020. For the same periods, the rate for women 20 years and older increased just 90 bps from last year to 57.2% and is 200 bps lower than pre-pandemic. The spread or difference between participation rates for adult men and women was 12.3% last year but has increased to 12.6% currently.
The BLS’s supplemental data measuring the effects of the coronavirus pandemic on the labor market for April indicated that the number of workers that teleworked fell to 18.3% from 21% in March and 35.4% in May 2020 as more businesses open their offices to their employees. About 9.4 million workers were unable to work because their employer closed or lost business due to the coronavirus pandemic, down from 11.4 million last month. However, this is well below the 49.8 million reported in May of last year.
The number of people working part-time that want full-time work has fallen to 5.2 million after holding steady at around six million workers since December while the number of workers who prefer part-time positions has remained near 19 million for the second consecutive month.
The number of unemployed workers on temporary layoff increased by about 88,000 from March to about 2.1 million, and the number of permanent job losers is just above 3.5 million. Workers marginally attached to the labor force slipped to just above 1.7 million in April as the number of discouraged workers stood at 573,000. Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months.
The U6 unemployment rate, which includes part-timers for economic reasons and marginally attached workers, fell to 10.4% in April compared to 10.7% last month and 22.9% in April 2020.
Most of the jobs gained in April were in the Leisure and Hospitality industry. The only other segments to produce solid gains were the Other Services and Government sectors. Those gains were negated by steep losses in Trade, Transportation and Utilities, and the Professional and Business Services industries. The remaining industry categories had weak or negative employment change for the month.
- As more restaurants, bars, amusement parks, and other entertainment venues reopen, employment in the Leisure and Hospitality industry continues to rebound. Almost three quarters of the 331,000 jobs gained in this industry were in food services and drinking places (+241,400). Another 89,600 jobs came back to the arts, entertainment, and recreation sector, particularly in the amusements, gambling, and recreation subsector (+72,700).
- The Government sector’s gain of 48,000 jobs in April was primarily education workers at the local level (+31,100 jobs) as classroom instruction continues to open up. Federal and state government employment increased by 9,000 and 7,000 workers, respectively, in April.
- The Other Services sector had a solid gain of 44,000 jobs in April with a jump of 16,300 jobs in membership associations and organizations, followed by personal and laundry services (+14,200), and the repair and maintenance subsector (+13,800).
- The Financial Activities job gain of 19,000 positions was largely in the real estate and rental and leasing services (+16,500) sector, led by rental and leasing services (+9,100). The insurance carriers subsector lost 7,000 jobs for the month.
- The Mining and Logging industry gained only 2,000 jobs in April, as gains in oil and gas extraction (+3,100) and mining (+1,500) were reduced by losses in the support activities for mining subsector (-1,300).
- The Information industry experienced a net gain of 1,000 jobs for the month with losses in publishing (-3,700) and motion picture and sound recording (-3,100) hampering gains in the telecommunications (+3,300) and other information services (+3,400) subsectors.
- The Construction industry saw no change in employment in April as moderate gains in construction of buildings (+1,300), heavy and civil engineering construction (+6,300), and residential specialty trade contractors (+4,400) were cancelled by an 11,800-job loss in nonresidential specialty trade contractors.
- The Education and Health Services industry lost 1,000 jobs in April as solid gains in social assistance of 22,600 jobs met a loss of 19,600 jobs in educational services. Meanwhile, the health care sector was also virtually unchanged for the month (-4,100).
- The worldwide computer chip shortage is being felt in various manufacturing sectors, particularly in motor vehicles and parts (-27,000). This accounted for more than the industry’s monthly loss of 20,000 jobs. Nondurable goods manufacturing gained just 2,000 jobs for the month.
- The Professional and Business Services industry had a huge loss of 111,400 jobs in the temporary help services subsector but the higher-paying professional and technical services sector added 42,600 jobs in April, resulting in a net loss of 79,000 jobs for the industry.
- More than 90% of the Trade, Transportation and Utilities industry loss of 81,000 jobs in April were in the transportation and warehousing sector (-74,100) as the couriers and messengers subsector lost more than 77,000 jobs for the month. A big loss of 49,400 jobs in food and beverage stores cut overall retail trade jobs by 15,300, while wholesale trade was up by 7,800 jobs last month.