April job growth misses estimates; jobless rate at 6.1%

Washington

US job growth unexpectedly softened in April from the prior month, suggesting that difficulty attracting workers is slowing momentum in the labour market.

Payrolls increased 266,000 after a downwardly revised 770,000 March increase, according to a Labor Department report on Friday that fell well short of projections. Economists in a Bloomberg survey projected a one million hiring surge in April. The unemployment rate edged up to 6.1 per cent, though the workforce participation rate also increased.

Treasury yields plunged, while inflation expectations spiralled downward and the US dollar turned sharply lower. US stock futures maintained gains. The eurodollar market pushed back its pricing for a Federal Reserve rate increase to mid-2023.

The disappointing payrolls print leaves overall employment more than eight million short of its pre-pandemic level, and is consistent with recent comments from company officials highlighting challenges in filling open positions.

In an interview with Bloomberg Television, Minneapolis Fed president Neel Kashkari said the data justified why the Fed is continuing to deliver stimulus. "Today's jobs report is just an example of we have a long way to go, and let's not prematurely declare victory," he said.

While job gains accelerated in leisure and hospitality, employment at temporary-help agencies and transportation and warehousing declined sharply.

Fed chair Jerome Powell said last week the dichotomy likely reflects a combination of a skills gap, child care obligations and lingering virus fears.

Some firms indicate enhanced unemployment benefits, and the latest round of pandemic-relief cheques are discouraging a return to work even as job openings approach a record.

On an unadjusted basis, payrolls rose by more than one million last month. Seasonal adjustments usually call for a large hiring gain in April, which may in part explain why the headline number fell short of forecasts.

Average hourly earnings rose 0.7 per cent in April from a month earlier, to US$30.17. The wage data for April suggest that the rising demand for labour associated with the recovery from the pandemic may have put upward pressure on wages, the Labor Department said in a statement.

A separate measure of compensation that is not subjected to shifts in industry employment - the employment cost index - rose 0.9 per cent in the first quarter. That was the largest quarterly gain since 2007, according to the Labor Department's data last week.

Average weekly hours increased to match the highest in records dating back to 2006.

Workforce participation, a measure of the percentage of Americans either working or looking for work, rose to 61.7 per cent in April from 61.5 per cent, likely supported by increased vaccinations that helped fuel the reopenings of many retail establishments, restaurants and leisure-facing businesses. BLOOMBERG