US economy adds 266,000 jobs in April, far fewer than expected

[WASHINGTON] The US economy gained just 266,000 jobs in April and the unemployment rate increased slightly to 6.1 per cent, the government reported on Friday, defying expectations for massive rehiring as the Covid-19 pandemic ebbs.

Economists had projected the economy would add a million positions as vaccines and government stimulus measures allow business to return to normal in the world's largest economy.

The Labor Department data showed strong rehiring in the leisure and hospitality sector, particularly at bars and restaurants that were the first to shed workers when the pandemic forced them shut in March 2020.

But those gains were offset by layoffs among temporary workers and couriers, transportation and manufacturing.

"This is a big miss that changes how we think about the recovery," University of Michigan economics professor Justin Wolfers said on Twitter.

The April report represented a setback for the rebound most analysts calculated was humming along, with the United States poised for even stronger jobs gains over the summer.

And the Labor Department also revised its strong March report downwards to show 770,000 positions added, 146,000 less than initially reported, though hiring in February was revised up by 68,000.

Average hourly earnings increased by 21 cents to US$30.17 in April after declining slightly in March, the report said, an indication that shortages of employees may be forcing businesses to up their compensation.

The leisure and hospitality sector added 331,000 jobs, with food and drinking places, such as restaurants and bars, making up more than half of the increase.

But those gains were offset by a decline of 111,000 jobs in temporary help services, and the loss of 77,000 positions in couriers and messengers.

Auto manufacturing lost 27,000 jobs, according to the report, which could reflect the production slowdown due to the global semiconductor shortage.

The labour force participation rate indicating the share of working age adults employed or looking for work changed little at 61.7 per cent, while the data said the economy remains short 8.2 million jobs it had in February 2020, before the pandemic hit.

AFP