The United States added 266,000 jobs in April – a quarter of the expected number – in a surprising setback to President Joe Biden’s efforts to revive an economy from the Covid-19 pandemic.
The hires reported in the Labor Department employment data released Monday were much weaker than expected, pushing the unemployment rate slightly to 6.1 percent.
Biden and his team have said his $ 1.9 trillion pandemic relief package, the Democratic president’s first major legislative achievement, is helping to bring the economy back from the pandemic.
“Today’s report, in my opinion, only underscores the importance of the actions we are taking,” Biden said in comments to the White House on Friday. “Our efforts are starting to work. But the climb is steep and we still have a long way to go.”
The data defied economists’ expectations for a gain of 1 million jobs as Covid-19 vaccines and government support measures bring business back to normal.
“This is a big miss that changes our thinking about the recovery,” said Professor Justin Wolfers of the University of Michigan on Twitter.
Biden had bet his $ 1.9 trillion package would reopen businesses during the pandemic and spur new hires, and while analysts say this could still happen once summer sets in, the data nonetheless poses a hiccup in the company’s plans. government.
While the president urged Congress to approve two new stimulus packages that channeled more than $ 4 trillion towards revamping U.S. infrastructure and workforce, the White House characterized last month’s data as a setback typical of the economy. recovery.
“Our economy is still missing about eight million jobs before the pandemic broke. It is important to keep in mind that job growth can be volatile from month to month,” Cecilia Rouse, chair of the Council of Economic Advisers, wrote in a blog post. .
Infrastructure and education
Unemployment rose in the US when the pandemic started in March 2020, but declined in the following year, aided by the vaccines and three large-scale government bailouts, of which Biden’s March plan is the latest.
The president is now calling for a congress over which his Democrats have barely any control to pass a $ 2.3 trillion infrastructure proposal aimed at combating climate change and upgrading roads, bridges and other infrastructure.
He has also proposed a $ 1.8 trillion plan to expand education and social protection.
But the Republican opposition generally sees its proposals as a spending move fueled by tax increases that they believe hurt U.S. competitiveness, and on Friday, lawmakers pointed to the bleak employment numbers to defend their arguments.
“This horrible job report should serve as an important reminder that raising taxes on the job-makers will absolutely make this situation worse,” tweeted Republican Congressman Lee Zeldin.
Wages are rising
The Labor Department data nonetheless showed that key industries were re-hiring, with the leisure and hospitality sectors – comprising the bars and restaurants most affected by pandemic business closures – adding the most jobs with a profit of 331,000 last month.
However, that hiring was offset by layoffs among agency workers and couriers and messengers, which fell by 111,000 and 77,000 respectively.
Positions at motor vehicles and parts manufacturers fell by 27,000, perhaps a sign that a semiconductor shortage that has forced US automakers to cut production could take its toll.
After a slight drop in March, average hourly wages rose 21 cents to $ 30.17, the report said, an indication that a shortage of workers may force companies to increase their compensation.
The Labor Department also downgraded its strong March report to show that 770,000 jobs were added, 146,000 fewer than initially reported, although hiring was revised by 68,000 in February.
The employment rate, which indicates the proportion of working-age adults who work or are looking for work, changed little at 61.7 percent, while the economy remains 8.2 million jobs short, according to data, as of February 2020, before the pandemic struck.
Analysts who predicted significant employment growth in April believed why this report was such a huge miss.
“Health and child / elderly care problems are likely to weigh on wage growth,” said Rubeela Farooqi of High Frequency Economics.
She predicted stronger new hiring in the coming months as the ongoing vaccination campaign against Covid-19 restores normality across the country, a view other economists shared.
“The reality is that the labor market is getting tight and the only thing limiting job gains is supply, not demand,” said economist Joel Naroff.
“The economy is moving forward and that’s what we need to focus on.”
( Jowhar with AFP)