US non-farm payrolls rise by just 266,000 in April
America's labour market last month generated the fewest jobs ever relative to economists' forecasts.
The Department of Labor reported non-farm payrolls grew by just 266,000 in April, possibly due, according to some observers, in part to the large increase in entitlement spending in the wake of the pandemic.
Other reasons put forward by economists for the shortfall in hiring were Americans' fear of returning to work, some people's inability to return to work given that schools remained closed and possibly the fact that some companies at least had gone under.
Economists had penciled-in a gain of 950,000.
Last month's shortfall in hiring came alongside a downward revision to the March reading from 916,000 to 770,000.
Private sector payroll growth slowed from 770,000 in the month before to 218,000 for April, and in government from 62,000 to 48,000.
In parallel, the unemployment rate ticked higher by one tenth of a percentage point to 6.1%, instead of falling to 5.8% as anticipated.
The labour force participation rate did however increase from 61.5% to 61,7%, a rise that some commentators labelled as "healthy".
Average hourly earnings meanwhile jumped by 0.7% month-on-month (consensus: 0.1%), but on annual basis they were only 0.3% higher - the smallest increase on record.
Commenting on Friday's report, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "Today's data have just made it much easier to argue that the re-upping of enhanced unemployment benefits by $300/week in the March relief bill has crimped labor supply.
"The benefits are due to expire in September but perhaps people think jobs will be just as easy to find then as they are now, so why take a job today? Studies last year found little evidence of this effect, however, even though the benefit then was $600 per week. It’s also possible that Covid fear is keeping some people out of the labor force, but that should fade over time."
For their part, Kathy Bostjanocic and Gregory Daco at Oxford Economics highlighted the job losses during the month across a wide swathe of sectors, ranging from temporary jobs to couriers and messengers, to auto manufacturing and retail.
Furthermore, when adjusted for people who had dropped out of the labour force, the unemployment rate was nearer 8.7% and payrolls 8.2m below their pre-Covid level, they said.
Nonetheless, with GDP set to grow by 7.7% in 2021 - its fastest pace since 1951 - their forecast was that the economy would add more than 8.0m jobs during the year and that the unemployment rate would drop to 4.3%.
In response, as of 1346 BST the yield on the benchmark 10-year US Treasury was off by six basis points to 1.508%, while euro/dollar was 0.52% higher at 1.2128.
S&P 500 futures were nevertheless holding higher, adding 13.75 points to 4,208.0, while those for the Nasdaq-100 were up 165.0 points to 13,762.75.
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