US Job Growth Slows
Reasons for the Decline in Job Gains
The pace of hiring in the US slowed in April more than expected. At the same time, unemployment ticked higher. This news is causing concern that an economic rebound may not be as smooth or as rapid as many had hoped.
The Labor Department said employers added 266,000 jobs in April and that the unemployment rate climbed to 6.1%. Economists expected the US economy to add 1 million jobs in April and post an unemployment rate of 5.8%. The Labor Department also revised new job gains in March downward from 916,000 to 770,000 .
Economists pointed to labor shortages, supply chain issues, and local economies which are still not fully reopened as reasons for the decline in job gains. Wall Street took the news in stride. Some analysts believe the announcement takes pressure off the Federal Reserve to raise interest rates in the near term.
Companies Struggle to Find Workers
Millions of people are still out of work, yet at the same time, companies across the country are facing labor shortages. There are currently more job openings in the US than before the pandemic hit.
The problem is particularly acute in the manufacturing, construction, and restaurant industries, which were hit hard during the pandemic. Those sectors are struggling to fill open positions, so some construction companies are not bidding on projects, some manufacturers are delaying deliveries, and some restaurant owners are lowering capacity. These actions could ultimately slow the pace of economic recovery.
Others are raising wages to incentivize potential employees to apply.
Labor Shortages Expected to Ease
Surveys suggest there are several reasons why people may not be returning to work. Some are concerned about getting COVID-19 or spreading it at work. Others do not have the skills for available jobs. Some are receiving more money in unemployment aid than they would earn at the jobs that are available. Additionally, businesses are also reopening before children are back in school, leaving parents without childcare.
The labor shortages are expected to ease as more people are vaccinated, schools reopen, and pandemic benefits expire. Until then, the shortages could get worse. The sputter in job gains shows that recovery from the pandemic may not be a completely smooth trajectory.
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