WASHINGTON: The United States added 266,000 jobs in April — a quarter of the number expected — in a surprise setback for President Joe Biden’s efforts to revive an economy blighted by the Covid-19 pandemic. The hiring reported in the Labour Department’s monthly employment data released Friday was far weaker than expected and pushed the unemployment rate up slightly to 6.1 percent.
The report defied economists’ expectations for a gain of one million jobs as Covid-19 vaccines and government relief measures allow business to return to normal.
In a speech following its release, Biden, who is pushing Congress to approve two spending measures costing more than $4 trillion and aimed at revamping US infrastructure and the workforce, characterized the report as a setback typical of economic recoveries.
“We knew we were facing a once-in-a-century pandemic and once-in-a generation economic crisis. We knew this wouldn’t be a sprint, it’d be a marathon,” the president said. “Quite frankly, we’re moving more rapidly than I thought we would.”
The White House had bet that the $1.9 trillion American Rescue Plan passed in March would reopen businesses that closed during the pandemic and spur rehiring.
While analysts say that may still happen as summer gets underway, the report nonetheless represents a hitch in the administration’s plans.
“This is a big miss that changes how we think about the recovery,” University of Michigan economics professor Justin Wolfers said on Twitter.
Unemployment surged in the United States when the Covid-19 pandemic began in March 2020, but has declined in the year since, aided by the vaccines and three massive government rescue measures, of which Biden’s plan enacted in March is the latest.
The president is now asking a Congress his Democrats only barely control to pass a $2.3 trillion infrastructure proposal aimed at fighting climate change and revamping roads, bridges and other infrastructure.
He has also proposed a $1.8 trillion plan to expand education and social protections.
But the Republican opposition has generally regarded his proposals as a spending spree fuelled by tax increases they see as harming American competitiveness, and on Friday, lawmakers pointed to the downbeat employment numbers to make their case.
“This terrible jobs report needs to serve as an important reminder that jacking up taxes right now on the job creators will absolutely only make this situation worse,” Republican congressman Lee Zeldin tweeted.
Democratic House Speaker Nancy Pelosi took the opposite view, saying in a statement, “the evidence is clear that the economy demands urgent action, and Congress will not be deterred or delayed from delivering transformational investments for the people.”
The Labour Department data nonetheless showed important sectors were rehiring, with the leisure and hospitality sector — comprising the bars and restaurants hardest-hit by pandemic business closures — adding the most jobs with a gain of 331,000 last month.
However, that hiring was offset by layoffs among temporary workers and couriers and messengers, which fell 111,000 and 77,000, respectively.
Positions at motor vehicles and parts firms declined 27,000, perhaps a sign that a semiconductor shortage that has forced American automakers to cut production may be taking its toll. After decreasing slightly in March, average hourly earnings increased by 21 cents to $30.17, the report said, an indication that shortages of employees may be forcing businesses to up their compensation. The Labour 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.
The labour force participation rate indicating the share of working age adults employed or looking for work changed little at 61.7 percent, while the data said the economy remains short 8.2 million jobs it had in February 2020, before the pandemic hit.
Analysts who had forecast a big employment gain in April differed as to why this report was such a huge miss.
“Health concerns and child/elder care issues are likely weighing on payroll growth,” Rubeela Farooqi of High Frequency Economics said in an analysis. She predicted stronger rehiring in months to come as the ongoing Covid-19 vaccination campaign restores normalcy nationwide, a view other economists shared.