The U.S. economy brought back far fewer jobs than expected in April, and the unemployment rate unexpectedly increased.
The Labor Department released the April jobs report Friday morning at 8:30 a.m. ET. Here were the main results from the report, compared to consensus data compiled by Bloomberg:
Non-farm payrolls, April: +266,000 vs. +1.000 million expected, +916,000 in March
Unemployment rate, April: 6.1%vs. 5.8% expected, 6.0% in March
Average hourly earnings, month-over-month, April: 0.7%vs. 0.0% expected, -0.1% in March
Average hourly earnings, year-over-year, April: 0.3%vs.-0.4% expected, 4.2% in March
Non-farm payrolls rose for a fourth straight month but at a sharply decelerated clip, even as easing social distancing standards across the country helping support the recovery. Heading into the report, economists expected a blowout payrolls number: Nomura chief economist Lewis Alexander said market participants should brace for a "monster U.S. payroll number," driven in large part by advances in some of the industries hardest-hit by the pandemic. Leisure and hospitality payrolls were still down by 3.3 million compared to February 2020 levels as of March, but have been making some of the largest gains over the past several months to try and lessen this deficit.
And recently, companies and business surveys have suggested that the main economic concern now is around making sure businesses have enough workers to keep up with rising demand.
"We know per recent qualitative data that companies are starved for employees at the moment. We can see that in both ISM reports (manufacturing and services) as well as in the Fed’s Beige Book," economists at RBC Capital Markets wrote in a note last week. "Moreover, we know that continuing claims (not-seasonally adjusted) made a sizable improvement when measured between the payroll survey weeks, and that underpins our forecast."
Still, many Americans remain on the sidelines of the labor market, and will likely continue to do so until concerns around the pandemic recede further. But with more than 40% of the population already injected with at least one dose of a COVID-19 vaccine, additional progress is unlikely to come quite as quickly, and many epidemiologists are now predicting the U.S. will never entirely reach "herd immunity." The labor market's ability to rebound further as businesses focus on risk mitigation rather than total elimination will be a key focus going forward.
"A big segment of the workers are still concerned about the pandemic. We estimate roughly 1.6 million workers want a job but didn't look for a job recently because they were still concerned about contracting the virus, or other factors around the pandemic," Joe Song, Bank of America U.S. economist, told Yahoo Finance on Wednesday. "On top of that, you had some workers citing that childcare was still a big factor for their decision not to participate in the labor market."
Heading into Friday's report, the economy was still 8.4 million payrolls short of levels from February 2020. And the labor force participation rate, at 61.5% in March, was 1.8 percentage points below levels from before the outbreak last year.
This post will be updated with the results of the April jobs report from the Labor Department Friday morning at 8:30 a.m. ET. Check back for updates.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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